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GST-on-Rental-Income-of-Immovable-Property

 

GST on Rental Income of Immovable Property

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Under the GST regime, renting out of immovable property is treated as a supply of service under the GST act. If

The income from renting out of residential house property is let out for the residential purpose is exempted under GST.

Or

The income from renting out of residential property for commercial purpose is taxable under GST, if the total value of services or goods supplied during the financial year exceeds Rs. 20.00 lakhs or Rs. 10.00 lakh for specified states**.

Therefore, if the residential property is rented for use of office, showroom, or any purpose other than residence will be attract under GST for tax purpose.

 

Rate of Tax-

All commercial properties are taxed at 18% GST. The place of supply, in case of immovable property is always the location of the property.

If the landlord is registered in different state from which the property is situated- IGST will charged or if the landlord and property are in the same state-SGST or CGST will be charged equally.

 

Example, 1

Mr. X rented his residential property to Mr. Y on a rent of Rs. 50,000 per month for his residence purpose. Whether it will be charged under GST or not?

Answer-

No, it is exempted under GST because GST is not applicable on immovable property rented out for residential purpose.

 

Example, 2

Mr. X rented his commercial space to Mr. Y on a rent of Rs 2.50 lakh per month. Whether GST will be charged or not, or if charged what is the rate of GST?

Answer-

Yes, Mr. X will be liable to pay GST because property rented out for commercial purpose comes under the GST or the threshold limit also crossed, So, the GST will be charged @ 18%.

 

Exemptions of GST on Rental income from Immovable Property-

  • Property is let out for residential purpose.
  • The total value of services provided, and goods supplied (*as described below) by the landlord during the financial year is less than Rs. 20.00 lakh or Rs. 10.00 lakh for specified states**.
  • Rent received by the registered charitable trust or a religious trust. Where:
    1. Rent of rooms is Rs 1,000 or less per day.
    2. Rent of shops, or other space for business units is Rs. 10,000 or less per month
    3. Rent of community halls or any open area is Rs 10,000 or less per day

 

* Total value of services and goods supplied-

Total Rental Income from all properties during the year + Total value of services and goods supplied under any business during the year.

 

**Specified states

Himachal Pradesh, Assam, Jammu & Kashmir, Uttrakhand, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Sikkim, Nagaland, Tripura.

 

ITC provisions when GST is charged on rent-

The person paying GST on rent can usually take credit for this tax paid to pay his other tax dues. In other words, if all the provisions to claim Input tax credit are fulfilled, ITC on GST paid on rent can be claimed.

 

TDS provisions on rental income from any property-

The TDS is applicable both to residential and commercial properties, if the rent from property exceeds Rs.1.80 lakh during any financial year, the tenant has to deduct TDS @ 10%.

 

Provisions of GST, whether IGST or CGST or SGST charged-

  1. If, Landlord or tenant are registered in same state i.e. Panchkula (Haryana), property is also situated in Panchkula (Haryana), then CGST or SGST will be charged @ 9% individually. ITC can be claimed by tenant.
  2. If, Landlord registered in Panchkula (Haryana), property is also situated in Panchkula (Haryana) and tenant is registered in Ludhiana (Punjab), then CGST or SGST will be charged @ 9% individually. ITC cannot be claimed by tenant.
  3. If, Landlord registered in Panchkula (Haryana), property is situated in Ludhiana (Punjab), and tenant is also registered in Ludhiana (Punjab) then IGST will be charged @ 18%. ITC can be claimed by tenant.



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