GST on surrender of tenancy rights on residential property to landlords

Certainly! Let’s address the GST implications related to the surrender of tenancy rights in a residential property.

Transfer of Tenancy Rights and GST:
The activity of transferring tenancy rights against consideration (such as tenancy premium) is considered a supply of service under the Goods and Services Tax (GST) regime.
Specifically, Schedule II of the CGST Act declares that any lease, tenancy, easement, or license to occupy land is a supply of services1.
Exemption for Residential Dwelling:
However, there is an exemption for the grant of tenancy rights in a residential dwelling for use as a residence.
When an outgoing tenant surrenders tenancy rights against consideration (part of the tenancy premium), it is liable for GST2.
Applicability of GST:
In Mr. A’s case, since he is surrendering his tenancy rights in a residential property, GST is applicable.
The rate of GST for such services is typically 18%3.
Circular No. 44/18/2018-CGST:
While Circular No. 44/18/2018-CGST does not specifically mention residential property, the legal provisions in the GST Act and Schedule II govern the treatment of tenancy rights.
Therefore, Mr. A should consider the applicable GST rate and comply with the necessary requirements for this transaction.
In summary, Mr. A is liable to pay GST on the surrender of his tenancy rights against the consideration of 40 Lacs, given that it involves a residential dwelling.