Is GST Applicable on Lease Rent Received from Oil Companies by Petrol Pumps...?

Petrol Pump dealers received Lease rentals from oil companies but many times there is no GST given on that rentals.

Please guide ...?

Replies (3)
Quick Summary
This discussion clarifies whether petrol pumps need to charge GST on lease rentals received from oil companies. Generally, renting commercial property is subject to GST at 18% (SAC code 997212). However, petrol pumps are only required to register for and charge GST if their total annual turnover, including lease rentals and sales of lubricants, exceeds the threshold of 20 lakhs. Petroleum products themselves are currently outside the GST ambit, but they count towards the aggregate turnover calculation.

If the rental income is less than 20 Lacs it is exempt from GST.

If the Income including Lease Rents of the Dealer exceeds 20 Lakhs in a year, then they are required to get Registration in GST and charge GST on the amount of Rents.
Further, oil companies will be allowed to take ITC on that payment of GST as their output is out of the purview of GST.
As per Notification No. 12/2017 - Central Tax ( Rate ), dated 28.06.2017, Renting of Residential Property for Residential purpose is EXEMPT from GST.

Therefore Renting of Commercial Properties ( like Shops, Warehouses, Office Space etc ) attracts GST. Hence Rent received from Oil Companies is taxable under GST. It is classified as a "SUPPLY OF SERVICES" by virtue of Para 5 clause (a) of SCHEDULE II of the CGST Act 2017.

The applicable Rate of GST is :

GST RATE : 18%
SAC CODE : 997212
DESCRIPTION : Rental or leasing services involving own or leased non-residential property.

Therefore, if you are Registered under GST ( although the 5 Petroleum products are temporarily out of the GST ambit, But if you also sale lubricants like Engine Oil, etc you have to opt for GST Registration if turnover of Oil Lubricants exceeds Rs. 20 lakhs ), you have to raise invoice against the Rent received from Oil Companies and charge GST accordingly.

If you are not Registered under GST, then you have to check your Aggregate Turnover limit of Rs. 20 lakhs for GST Registration.

Kindly Note that AGGREGATE TURNOVER as defined under Section 2(6) of the CGST Act 2017 includes "EXEMPT SUPPLY" as well and Exempt Supply as defined under Section 2(47) of the CGST Act 2017 includes Non-Taxable Supply ( like in your case Petroleum products like Petrol, Diesel, ATF etc. ).

Therefore while calculating the Aggregate Turnover threshold limit of Rs. 20 lakhs, you have to include turnover from :

1). Petroleum Products +
2). Lubricant Oils +
3). Lease Rental Income.

Regards,
Shivam RC.

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