GST on Rent of resident + office
A composition taxpayer renting a house for residence plus office:
• RCM on renting of residential dwelling to a registered person (Entry 5AA): applies to registered persons, including composition taxpayers (the January 2025 exemption covers only Entry 5AB commercial rent). So 18% RCM on the residential rent, if the landlord is unregistered.
• If part of the dwelling is used as an office, it's still a "residential dwelling" (the nature of the property). Entry 5AA applies.
• Composition taxpayers can't claim ITC, so the RCM is a cost.
• CBIC has clarified that a proprietor renting a residential dwelling in personal capacity for his own residence isn't liable to RCM. Where the dwelling is also used as an office, the position is less clear, so document the use.
RCM is not automatically payable on the full rent. The exemption for renting a residential dwelling applies only where it is rented for use as a residence. If part of the 3-BHK is used as an office, the residential-use exemption may not cover that portion. Where the premises are genuinely used for both purposes, the rent attributable to office use is the relevant portion for examining RCM; the full rent is not automatically taxable merely because some office use exists.
The exact treatment depends on the wording and effective date of the notification referred to, the lease terms and how the rent is allocated. Also verify the recipient’s composition status: the exemption/RCM provisions and the composition scheme’s restrictions should be assessed separately.
For a mixed-use rental, keep the lease and a reasonable basis for apportioning rent with the GST records. Manual review of lease terms, use and tax treatment is difficult, and automation can reduce repetitive work while professional judgment remains in control. At Jir AI, our 2,000+ AI agents and 650+ integrations streamline GST, ITR, TDS, TCS and other compliance workflows, helping reduce manual workload by up to 70%. WhatsApp us to explore a smoother compliance workflow: https://wa.me/message/3HVOZ7HIY4ESC1
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