WHETHER GST APPLICABLE ON RENT OF COMMERCIAL PROPERTY?

Under the GST framework in India, the applicability of GST on renting out a residential property depends on the purpose for which the property is rented. Here are the key points relevant to your query:

1. If the residential property is rented for residential use:
Renting out residential property for residential purposes is exempt from GST, irrespective of whether the owner is an individual or a company.


2. If the residential property is rented for commercial use:
If the residential property is rented out for purposes other than residential use (e.g., office, guest house for employees, or commercial activities), it will attract GST at the rate of 18% on the rental income.


3. Additional Points to Consider:

If your company's aggregate turnover (including rental income) exceeds the GST threshold limit (₹20 lakh for most states, ₹10 lakh for special category states), GST registration and compliance will be applicable.

As the property is owned by a Pvt. Ltd. company, and if the rent is for commercial purposes, GST will likely apply even if the rental income alone does not cross the threshold.




Conclusion:

Residential Use: No GST applicable.

Commercial Use: GST 18% GST is applicable .

Thanks Sudhir Sir,

You cleared all the query in 1 shot.

Can i get which section says this or any circular on this..

Thanks

Yes, GST applies to rent from commercial property (used for business or commercial purposes). Here is the full picture:

FORWARD CHARGE (landlord charges and pays GST):
If the landlord is a registered GST person and is renting commercial property to any tenant ,  forward charge applies. Landlord collects 18% GST and remits it to the government.

RCM (Reverse Charge Mechanism):
If the landlord is UNREGISTERED and the tenant is a REGISTERED GST person, RCM applies under Notification 13/2017-CT. The tenant pays the GST directly to the government on behalf of the landlord.

REGISTRATION THRESHOLD:
If a landlords aggregate turnover from taxable supplies (commercial rent) crosses Rs 20 lakh per year (Rs 10 lakh for special category states), GST registration becomes mandatory.

RESIDENTIAL VS COMMERCIAL:
- Residential dwelling rented for USE AS RESIDENCE: EXEMPT from GST regardless of amount
- Residential dwelling rented for commercial/office use: Taxable at 18%
- Commercial property rent: Always taxable at 18%

If you are receiving both residential and commercial rent, only the commercial rent counts toward the Rs 20 lakh registration threshold.

For [GST registration and return filing for property owners receiving rental income](https://taxgarden.in/services/gst-registration), Tax Garden handles RCM compliance and landlord GST registration.

The question is actually about letting a residential property owned by the company:

• Renting a residential dwelling for use as a residence is exempt (Notf 12/2017-CT(R), Sl. 12), even when the landlord is a company. The exemption depends on use, not on who the landlord is.

• Exception: if the residential dwelling is rented to a GST-registered person (company, firm or registered proprietor), GST at 18% is payable by the tenant under RCM from 18 July 2022 (Notf 05/2022-CT(R), Sl. 5AA). A registered proprietor renting it for personal residence (not business) is excluded (amendment from 1 January 2023).

• If the residential property is rented for commercial use (office, guest house for a business), it is taxable at 18% under forward charge by the company (registered landlord).

• The company's ITC: rent received exempt means you may need Rule 42/43 reversal of common ITC attributable to this exempt supply.

• Income-tax: rent is taxed as "Income from House Property" for the company (30% standard deduction). TDS by the tenant: Sec 194I (business tenants) or 194-IB (individual tenants not under audit, rent above Rs 50,000 a month).