Impact of GST on Rent

Ayush (Executive ) (6332 Points)

05 April 2023  

Under the Goods and Services Tax (GST) Act, renting out of an immovable property would be considered as a supply of services. This means that if a person rents out a property, they would be providing a service, and GST would be applicable on the rent charged for the same.

However, it is important to note that not all types of rents are taxable under GST. GST is applicable only on certain types of rent, such as:

Renting out of a property on lease, rent, easement, or licensed to occupy: If a property is given out on lease, rent, easement, or licensed to occupy, it would be considered as a supply of services, and GST would be applicable on the rent charged for the same.

Renting out of a commercial, industrial, or residential property for business: If any property is leased out (or let out) including a commercial, industrial, or residential property for business (either partly or wholly), it would be considered as a supply of services, and GST would be applicable on the rent charged for the same.

However, if a person rents out a residential property for residential purposes, it is exempt from GST. This means that if a person rents out a residential property to an individual for residential purposes, they would not be required to pay any GST on the rent charged.

In conclusion, any type of lease or renting out of an immovable property for doing business would attract GST at 18%, as it would be treated as a supply of service. However, renting out a residential property for residential purposes is exempt from GST.