GST Applicable on Renting of Immoveable Property by Tamil Nadu Labour Welfare Board to Government

Last updated: 12 August 2021

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Quick Summary

The Tamil Nadu Authority for Advance Ruling (TNAAR) has determined that the Tamil Nadu Labour Welfare Board is not a 'Local Authority' under GST law, as its members are appointed, not elected. Consequently, the Board must register for GST and pay GST under the forward charge mechanism on income from renting out its immoveable property to government and business entities. The Reverse Charge Mechanism (RCM) was found not to be applicable.

Court :
Tamil Nadu Authority for Advance Ruling

Brief :
In M/s. Tamil Nadu Labour Welfare Board [TS-399-AAR(TN)-2021-GST dated June 18, 2021], M/s. Tamil Nadu Labour Welfare Board ('the Applicant') seek an advance ruling on applicability of Goods and Services Tax ('GST') on registration of the Applicant and rental income received by the Applicant from the Government and business entities along with whether Reverse Charge Mechanism ('RCM') is applicable on the above stated income.

Citation :
TS-399-AAR(TN)-2021-GST dated June 18, 2021

In M/s. Tamil Nadu Labour Welfare Board [TS-399-AAR(TN)-2021-GST dated June 18, 2021], M/s. Tamil Nadu Labour Welfare Board ('the Applicant') seek an advance ruling on applicability of Goods and Services Tax ('GST') on registration of the Applicant and rental income received by the Applicant from the Government and business entities along with whether Reverse Charge Mechanism ('RCM') is applicable on the above stated income.

The Hon’ble Tamil Nadu Authority for Advance Ruling ('TNAAR') held that the Applicant is not covered under the head of 'Local Authority' under Section 2(69) of Central Goods and Services Tax Act, 2017 ('CGST Act') for reason that the members are not elected but appointed by the Government and being a body corporate, it has a separate legal existence.

Further, relying on Notification No. 13/2017-C.T.(Rate) dated June 28, 2017 amended by Notification No. 03/2018 -C.T.(Rate) dated January 25, 2018, the TNAAR stated that Applicant does not fall under 'specified class of supplier of services' thus, RCM is not applicable on the Applicant.

Therefore, the Applicant not being a Local Authority has to be registered under GST as well as liable to pay GST on the services of renting of immovable property to Government and business entities under forward charge.

FAQ :

No, the TNAAR ruled that the Tamil Nadu Labour Welfare Board is not a 'Local Authority' because its members are appointed by the government, not elected, and it has a separate legal existence as a body corporate.

Yes, as the Board is not classified as a 'Local Authority' and receives rental income, it is required to register under GST.

Yes, GST is applicable on the rental income received by the Tamil Nadu Labour Welfare Board from renting out immoveable property to government and business entities.

GST is payable under the forward charge mechanism by the Tamil Nadu Labour Welfare Board.

No, the TNAAR stated that RCM is not applicable as the Board does not fall under the specified class of suppliers of services eligible for RCM.