GST on renting of residential house property: This is one of the areas where amendments are coming time and again. So, let us understand the various provisions of GST applicable to such a supply: Renting of residential house is considered as a supply of service under CGST Act. When the residential house is rented for the purpose of residence and the tenant is not registered under GST, it is not taxable. In other cases, i.e., when a residential house is either rented for commercial purpose or the tenant is registered under GST, it is taxable @ 18% under reverse charge basis. When a tenant is registered under GST, it is deemed that the residential dwelling is used for commercial purpose, unless the tenant uses it in own capacity as own residence and not for business purpose.
Summary of the provisions
| SL | Use | Taxability |
| 1 | Renting of residential dwelling for residential purpose | |
| a | Landlord registered & Tenant registered | 18% under Reverse Charge |
| b | Landlord unregistered & Tenant registered | 18% under Reverse Charge |
| c | Landlord registered & Tenant unregistered | Exempted |
| 2 | Renting of residential dwelling for commercial purpose | |
| a | Landlord registered (registration of tenant does not matter) | 18% under Forward Charge |
| b | Landlord un-registered (registration of tenant does not matter) | Exempted |
Applicability of CGST/SGST/IGST on renting of House Property
In case of renting of house property, ‘place of supply’ is the location of the property. Based on that, if the state of registration of the landlord and the state of location of the property are different, it is a case of inter-state supply and IGST is leviable. If both are in same state, it is a case of intra-state supply and CGST & SGST is leviable. State of registration of the tenant is irrelevant in deciding this chargeability. But, in case the tenant is registered in a state other than the state where the property is located, the tenant cannot claim the Input Tax Credit of CGST & SGST both.
Renting of religious place
Renting of religious place meant for public by registered charitable trust or religious trust is exempted from GST in the following cases:
(i) Rent of room is than Rs.1000 per day; or
(ii) Rent of shop or other places for business is less than Rs.10,000 per month; or
(iii) Rent of community hall is less than Rs.10,000 per day.
GST on expenses made on property given on rent
GST paid for carrying out repairs and maintenance expenses or brokerage etc of the property given on rent is allowed as Input Tax Credit to the extent it is not capitalized.
TDS applicability on GST on renting of residential house
A registered tenant should deduct TDS at 10% if rent paid during a year exceeds Rs. 2.4 lakhs.
GST on rent charged for renting of immovable property by government or local authorities
GST on rent charged for renting of immovable property by government or local authorities to a registered person will be leviable under reverse charge basis. However, when the same property is rented to an unregistered person, the government would themselves deduct GST under Forward Charge basis.
GST on rent vs GST on rental income
‘GST on rent’ and ‘GST on rental income’ are different. Provisions about GST on rent are already described above. But, GST on rental income is charges at 18% on the rental income, which is payable by the landlord if his property is let out for commercial use and his total rental income in a year exceeds Rs.20 lakhs.
Conclusion: GST on renting of residential House
From the above discussions, it must be underscored here that the applicability of GST on renting of residential house is based on the ultimate use of the property and not the type of the property. As long as the property is being used for commercial or business purposes, GST on rent and GST on rental income will be applicable even if the property type is residential. Moreover, as per the amendment brought after the 42nd meeting of the GST Council on July 13, 2022, which came into effect from July 18, 2022, if the property is being used for business purpose, GST registered tenants will be liable to pay GST at 18%, irrespective of whether the landlord is GST registered or not.
For recent GOI notification on renting of residential property ( Notification.15/2022), refer the link-https://gstcouncil.gov.in/sites/default/files/All-rate-notification/15_2022-ctr-eng.pdf
You may also like– https://anptaxcorp.com/gst-on-works-contract-a-comprehensive-guide/
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Very informative article.Keep on posting.
Thank you