RCM on Rent Applicablity

RCM Applicability on Residential Rent Paid by Bank The bank pays residential rent on behalf of its staff. In this scenario, the Reverse Charge Mechanism (RCM) might be applicable.

Key Considerations - *GST on Rent*: Residential rent is exempt from GST, but commercial rent is taxable. -

 *RCM Applicability*: RCM applies to certain services, including renting of immovable property. RCM on Residential Rent Since residential rent is exempt from GST, RCM would not be applicable on the rent paid by the bank for its staff's residential accommodation.

Commercial Rent However, if the bank pays rent for commercial properties (e.g., office spaces), RCM might be applicable, and the bank would need to pay GST on the rent. 

Conclusion In summary, RCM is not applicable on residential rent paid by the bank for its staff's accommodation, as residential rent is exempt from GST.

The RCM rule for commercial rent changed significantly from 10 October 2024 via Notification 09/2024-CTR.

Here is how it works now:

For commercial property (office, warehouse, shop):
- If your landlord is UNREGISTERED under GST and you (tenant) are REGISTERED: you pay GST at 18% under RCM
- If your landlord is REGISTERED under GST: they charge GST in their invoice directly (forward charge), no RCM
- If both landlord and tenant are unregistered: no GST

For residential property (the older July 2022 rule still applies):
- If your landlord provides residential dwelling to you as a registered person: RCM at 18% applies, regardless of whether landlord is registered or unregistered
- If tenant is an individual not registered under GST: no RCM

ITC on RCM paid: you can claim ITC on the GST paid under RCM for commercial rent, provided the space is used for business purposes. ITC is NOT available for residential accommodation (Section 17(5) block).

For the full commercial vs residential RCM comparison and ITC eligibility table, this [GST on rent guide for commercial and residential property](https://taxgarden.in/blog/gst-on-rent-commercial-residential-rcm-itc-guide) covers all scenarios.

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The deciding test is who the tenant is: 18% RCM on residential rent (Notfn 5/2022-CT(R), from 18-07-2022) applies only where the bank itself is the lessee; if the lease is in the employee's own name and the bank merely pays or reimburses the rent, the employee is the recipient and no RCM arises – the 'exempt' view in the first reply is outdated.