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RCM on Rented out Residential Property for Commercial Purpose

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Abhinav rathi

21 Points Posted on 18 March 2023

The Landlord is registered under GST in the same state where the property is located but the tenant is registered in another state in that case RCM will be paid as IGST or CGST & SGST by the tenant? Tenant is a registered person.

Replies (2)

Quick Summary

This discussion clarifies the Goods and Services Tax (GST) implications for renting out residential property for commercial use. When a landlord and tenant are registered in different states, the place of supply is determined by the property's location. Consequently, Reverse Charge Mechanism (RCM) on such rentals is typically payable under CGST and SGST, not IGST. The tenant is generally required to obtain GST registration in the state where the property is located.

Lotus Agrawal

Practice

891 Points Posted on 18 March 2023

In case of Immovable property, Place of supply is the state where the property is situated and if in your case RCM is applied on that it should be CGST and SGST.

CA Sorav Gupta

Chartered Accountant

328 Points Posted on 20 March 2023

If you are having a place of business in another state, then as per CGST Act, 2017, you are mandatorily required to get the GST registration in that state also, Hence, the tenant is required to get GSTIN in the other state also.

RCM shall be payable under CGST & SGST.

I have assumed that the said property is being used for the purpose of business and that the outward supply is also being made from that place.

In case of any further queries, kindly mail me at casoravgupta @ gmail.com

Thanks & Regards
CA. Sorav Gupta
(Practicing Chartered Accountant)