*******GST on Rental Income of a Residential House Property given to a registered person 

Clipped from: https://taxguru.in/goods-and-service-tax/gst-rental-income-residential-house-property-registered-person.html?utm_source=feedburner&utm_medium=email

GST Impact on Rental Income of a Residential House Property has given to a registered person (Under GST) under GST Law w.e.f. 18.07.2022.

The GST Council made recommendation to the Government to impose GST on ‘a person has given residential property to the registered person (GST Registered Person) to renting of residential dwellings (Living) with effect from 18.07.2022 in it’s 47’th meeting  at Chandigrah on 28th &29th of June’2022.

Prior to 18.07.2022, A person has given a residential property for residential purpose (Other than Commercial purpose) is exempted from GST Tax as per Notification No.12/2017-C.T. Dated.28.06.2017. Now as per 47th  GST Council recommendations, CBIC has given Notification No.4/2022- Central Tax (Rate),Dated.13.07.2022 withdrawn such exemptions.

Now onwards, as per Notification No. 05/2022-Central Tax Rate) dated. 18.07.2022, a unregistered person(Not registered under GST) has given the residential house property rented out to a registered person (Registered under GST ) is liable to pay  GST under Reverse Charge Mechanism by the Tenant.

If a residential property owner (Landlord) is unregistered under GST Law, he has given such residential property to a registered person (Registered under GST Law), for use the purpose of residential under that circumstance, Tenant is liable to pay GST tax @18% under Reverse Charge Mechanism (RCM) as per Notification No. 05/2022-Central Tax (Rate) dt.13.07.2022.

Example-1:

When a company takes a residential house property for use of residence on rent for employees if will be considered as an item of business expenditure. GST Tax will be paid @18% under RCM and eligible to claim Input Tax Credit by the company.

Example.2:

When a person is having GST registration under Composition Scheme, takes a residential house property for the purpose of residence on rent then it will be considered as an item of business expenditure. GST Tax will be paid under RCM but not eligible to claim input tax credit as per Section 10(4) by a composition dealer.

Example.3:

When an individual who is registered taxpayer under GST Law,2017, as a proprietary concern, takes a residential house property for the purpose of residence on rent for him or her or family then it will be considered as an item of personal expenditure and not the business expenditure of a proprietary concern . GST tax will be paid under RCM but the ITC of the GST tax paid under RCM be claimed as it is blocked as per Section 17(1) of the CGST Act,2017.

Example.4:

When a company, registered under GST Law and take a residential property on rent for one of its director for residential purposes, then such company have  to pay GST Tax @18% under RCM as per N.No.05/2022-Central Tax(Rate).dated.13.07.2022 and thereafter, claim input tax credit (ITC) on the same.

Example.5:

A unregistered person (Un-registered under GST) has given a residential house property to a unregistered person (Un-registered under GST) on monthly basis for use for residential purpose, under that circumstances TENAT is not liable to pay GST. Because it is exempted as per Notification No.12/ 2017- C.T. Dated. 28.06.2017.

Disclaimer: The contents of this article have been prepared on the basis of Press Release by the GST Council issued on the 28’th & 29’th, June’2022 and Notification No.04/2022,Central Tax (Rate), dated.13.07.2022 and Notification No.05/2022-Central Tax ,Rate) dated.18.07.2022 issued by the CBIC. Although care has been taken to ensure the accuracy, completeness and reliability of the information available, the author assumes no liability.  Therefore, users of this information are expected to refer the relevant law, the information as given in no case shall be constructed as a professional advice or opinion.

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