GST Not Applicable on Renting of Residential Property to Registered Person in Own Capacity for Personal Use: GST Council

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By Rasheela Basheer – On December 17, 2022 4:14 pm

Renting of Residential Property

The 48th GST Council meeting has clarified that no GST would be levied on renting of residential property to registered person in his/her own capacity if the same is for personal use and not for business use.

No GST is payable where the residential dwelling is rented to a registered person if it is rented it in his/her personal capacity for use as his/her own residence and on his own account and not on account of his business.

The 47th GST Council meeting presided over by Union Finance Minister Nirmala Sitharaman in June, approved a slew of changes to the taxing scheme including levy of 18% GST on the registered tenant. As per the modified law, the tenant must pay Goods and Services Tax at the rate of 18% when renting a residential property. This has led to so many confusions in the minds of the people.

Following this, the Government clarified that “No GST even if proprietor or Partner of Firm rents residents for personal use,” the twitter handle said.

As per the new rule, a tenant, who is registered under the GST, is required to pay Goods and Services Tax at 18 per cent for renting a property, effective from July 18. The 18 per cent tax on rent paid is only applicable to tenants registered under the GST, meaning a GST-registered person who carries out business or profession will incur 18 per cent GST on such rent paid to the owner.

In September, a division bench of the Delhi High Court has held that GST is not leviable on the portion of rent received by a  Proprietor of a registered proprietorship firm when such renting is sone in his /her own personal capacity for use as his/her own residence as well as not for use in the course or furtherance of business of his/her proprietorship firm.

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