GST ON RENTAL INCOME. agencies to registered persons under GST under RCM. As per section 13(4) Services provided in relation to immovable property including services provided by architects, interiors decorators, surveyors, engineers, Other experts or estate agents, service of grants of rights to use immovable property, carrying out/ co-ordination of construction work, then the place of supply shall be location at which the immovable property is located. The Government or a local authority or a governmental authority is liable to pay tax on supply of services other than the services notified as exempt or notified as neither a supply of goods nor a supply of services under clause (b) of sub-section (2) of section 7 of the CGST Act, 2017. hence the service supplied by Mr. X is exempt under GST. This limit is liable upon the taxpayer. Therefore, in the given case, GST is payable under reverse charge by the recipient – registered business entity. Before implementation of GST the land lord earning rent of more than Rs. April 1, 2021, Reinstate Audit Provisions Under GST Laws, 13 Suggestion to FM for Simplification of GST (Hindi & English), Services supplied by the Central Government, State Government, Union territory or local authority by way of renting of immovable property to a person registered under the, Central Government, State Government, Union territory or. 20 Lakhs. Schedule II of CGST Act, 2017 states that renting of an immovable property is a supply of service. The applicability of GST on rental income depends on the nature of asset or property. Renting Of Commercial Immovable Property Renting of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes having room tariff Rs.1000 and above but less than Rs.2500 per room per day are taxable under GST at 12% with full ITC. Therefore, in the given case, GST is payable under reverse charge by the recipient – registered business entity. GST ON RENTING OF IMMOVABLE PROPERTY SERVICE June 01, 2018 GST ON RENTING OF IMMOVABLE PROPERTY SERVICE For every space renting out or lease it out for commercial purposes, the liability of GST (Goods and Services Tax) arises. 10,000 per day. TDS (Tax Deduction at Source) on Immovable Property. 13/2017- Central Tax (Rate), dated the 28th June, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. In the GST regime, the issue of ‘renting of immovable property’ is addressed in schedule II. 80,000. GST is applicable on immovable properties. Important Point to remember: GST on rent charged for immovable properties by the government or local authority to a registered person will be under Reverse Charge Mechanism. Copyright © TaxGuru. 692 (E), dated the 28th June, 2017 and was last amended by notification No. Is GST applicable for assignment of leasehold right in immovable property? By the Finance Act 2007, Central Government has extended the levy of service tax on renting of property also with effect from 1.06.2007. Taxability of services of immovable property. 800 per day). Tax Deduction at Source or TDS on rent is likely to be deducted by the person who is making the payment if the total amount to be paid during the financial year is more than Rupees 1.8 Lakhs per annum. Your email address will not be published. Required fields are marked *, Notice: It seems you have Javascript disabled in your Browser. (c) GST on services supplied by Central Government, State Government, Union territory/ local authority by way of renting of immovable property to a person registered under CGST Act, 2017 is payable under reverse charge. Sorry, your blog cannot share posts by email. This video discusses in details the taxability of renting of immovable property under GST. The Central Government today notified that the supply of service of immovable property by the the Central Government, State Government, Union territory or local authority by way of renting of immovable property to a person registered under the Central Goods and Services Tax Act, 2017 is subject to Goods and Services Tax (GST) under reverse charge basis. Act, 2017. 1,000 per day and in case service of renting of community hall shall be exempt if the rent per day is not more than Rs. 692(E), dated the 28th June, 2017, namely:-, (i) in the Table, after serial number 5 and the entries relating thereto, the following serial number and the entries relating thereto shall be inserted, namely: –, (ii) in the Explanation, after clause (e), the following clause shall be inserted, namely: –. 13/2017 – Central Tax (Rate), dated the 28th June, 2017, vide number G.S.R. After the introduction of GST, the threshold limit of taxable turnover has been increased  from 10 lakhs paid in the old tax regime to Rs. According to Schedule II of the GST Act, 2017, the government of India has imposed a … GST is applicable on immovable properties. However, renting of immovable property is not considered as supply of such immovable property. 10 lakhs then the land lord was exempt from paying tax on such rental income. In order to submit a comment to this post, please write this code along with your comment: fd45c0ad2223517ab084f0101b4c3d48. Whether Indian Railways will be covered under the above notification ? 10,000 per day, by trust or charitable trust registered u/s 12AA of the income tax act, 1961, Services provided in relation to immovable property including services provided by architects, interiors decorators, surveyors, engineers, Other experts or estate agents, service of grants of rights to use immovable property etc. Note: -The principal notification was published in the Gazette of India, Extraordinary, vide notification No. 33/2017 – Central Tax (Rate), dated the 13th October, 2017 vide number G.S.R. Here, the place of supply shall be the location where the property is located i.e. Nil Pune. if Railways has leased a land, then it will be under forward charge or reverse charge after 25th Jan.2018 ? As per entry 13 of notification no 12/ 2017-CT(rate), Services by way of renting of precincts of a religious place meant for general public owned or managed by a charitable trust registered u/s 12AA or Trust registered u/s 10(23C)(v) or authority covered u/s 10(23BBA) of the Income tax act 1961, if: Hence, from above we can see that service of renting of room is exempt if room rent is less than Rs. Also, the tax charged by legal authorities on the rental income from immovable property rented to a registered person then it is listed under the Reverse Charge Mechanism. From basic questions like is GST payable on rental income and what is the rate of GST on rental income in India, to questions like which component of GST is applicable on rent. renting out of any property by the Reserve Bank of India; renting out of any property by a Government or a local authority to a non-business entity. Under Secretary to the Government of India. From 25th Jan 2018 onwards (notif. 13/2017- Central Tax (Rate) so as to specify services supplied by the Central Government, State Government, Union territory or local authority by way of renting of immovable property to a registered person under CGST Act, 2017 to be taxed under Reverse Charge Mechanism (RCM). Where the location of immovable property is outside India then the place of supply shall be the location of the recipient. 10/2017-IT (R) dated 28.06.2017, also provides certain exceptions i.e., the recipient is not required to discharge GST on receipt of the following services from the Central Government, State Government, Union Territory or Local Authority: renting of immovable property; This exemption is not applicable to services supplied by post, railways, renting of immovable property and in relation to aircraft or vessel. Let us now consider the taxability of above service and amount of taxable supply on the hands of XYZ trust: As per section 12(3) Services provided in relation to immovable property including services provided by architects, interiors decorators, surveyors, engineers, Other experts or estate agents, service of grants of rights to use immovable property, carrying out/ co-ordination of construction work, then the place of supply shall be location at which the immovable property is located. For purposes of the GST and the HST, "real property" includes. Renting of Immovable Property – Service Tax By the Finance Act 2007, Central Government has extended the levy of service tax on renting of property also with effect from 1.06.2007. As per notification no 12/2017-Central tax dated 28-06-2017, services by way of renting of residential dwelling for use as residence is exempt from GST. Renting means allowing, permitting or granting access, entry, occupation, use or any such facility, wholly or partly, in an immovable property, with or without the transfer of possession or control of the said immovable property and includes letting, leasing, licensing or other similar arrangements in respect of immovable property. 1000 per day, by trust or charitable trust registered u/s 12AA of the income tax act, 1961, Renting of hall or Kalyanamandapam or an open area of a religious place with rent per day not more than Rs. After having arrived at a conclusion that the services of ‘renting of immovable property’ is a supply of service, we need to examine as to whether the said supply is exempted supply or not? Schedule II of Section 7 of CGST defines Renting of Immovable Property as supply of Services By virtue of Section 9 (4) of CGST, GST on rent has to be paid under RCM by registered person, if the rent is paid by registered person to unregistered person. As per section 12(3) the place of supply shall be the place where the immovable property is located i.e. Join our newsletter to stay updated on Taxation and Corporate Law. 10,000, Fully exempt as charges per day is less than Rs. GST has given relief to trust and religious organization if such trust is registered under section 12AA of the Income tax act, 1961 and also certain other condition as explained further. Renting of immovable property by Government– As per the notification if there is any government property that is being rented by Government or the local authority then services provided to any registered person under CGST Act then that registered person will have to pay GST on renting of immovable property on reverse charge basis. The Notification No. Renting of all other immovable properties would be taxable unless covered by an exemption. Mr. X is a resident of Mumbai, Maharashtra has rented out his property in Pune to Mr. Y of Gujarat. (ex: to a person not registered under GST). However, when the property is rented to an Unregistered person, the government would themselves deduct GST (Forward charge mechanism). For Renting of immovable property SAC code start with 9973. There is no service tax charged on renting of immovable property for residential purpose. Renting of Immovable property is no exception to this new implementation. Section 11 of the CGST Act empowers the Central Government to exempt goods or services or both from the whole or any part of the tax leviable thereon. Like HSN Code GST law obtained For SAC Code, its Service Accounting Code. 3/2018-CT (R)) - Renting of immovable property by govt. An 18% GST on residential flats is charged on such rental income under the new regime, if the rent amount per year exceeds Rs 20 lakhs. [Notification 17/2017-CT(Rate)] Place of Supply. The E-commerce will be liable to pay GST under section 9(5) of CGST. Regarding renting of immovable property your place of residence is place of supply. The Karnataka Appellate Authority of Advance Ruling (AAAR), while upholding the order of AAR held that 18% GST is applicable on renting of commercial space in immovable property. 1275 (E), dated the 13th October, 2017. Post was not sent - check your email addresses! Similar to the terms used in a property buying process, the world of renting is also filled with complex terms of its own. By Frah Saeed July 7, 2020. However renting of residential dwelling for use as residence is not subject to GST A major regulation was included in the Goods and Services Tax (GST) Act on the generation of income from rent by renting or leasing immovable property to persons and businesses. 13/2017-CT (R) dated 28.06.2017 and Notification No. Before heading ahead in understanding  the implementation of GST let us first understand what is meant by an immovable property, It is a an immovable object  or property attached to the earth like a piece of land or house which cannot be moved unless altered or destroyed. The advent of GST has got impact on most sectors in India and rentals obtained from immovable properties aren’t exception to the new taxation either. In this case if Mr. Y is registered person in Gujarat than he cannot get setoff of Maharashtra SGST as SGST of two different state cannot be set off against each other. As per the rates for services notified by the Central Government as approved by the GST Council specifically exempts services by way of renting of residential dwelling for use as a residence. 1000 per day by trust or charitable trust registered u/s 12AA of the income tax act, 1961, Renting of Precincts of a religious place with rent per day more than Rs. The following types of renting of immovable property are exempt from GST: Renting of precincts of a religious place meant for general public. CBDT Revising ITR Form FY 2019-20 & Utilities to release on 30 May 2020, Sources Due date of ITR Filing may be Extended, When Registration in GST is Compulsory? 1000, Transfer of development rights and floor space index for construction of residential apartments, Renting of Immovable property for residential purpose, Renting of Immovable property for commercial purpose, Renting of Precincts of a religious place with rent per day not more than Rs. from April 2020, Formation of trust with Charity Commissioner, GST supply in case of Immovable properties, Service of renting of Immovable property for residential purpose, Service of renting of Immovable property for commercial purpose, Service of renting of hall or Kalyanamandapam, Fully Taxable as charges per day is more than Rs. GST Rate on Renting of Immovable Property are given by GST Council. Place of supply in case location of suppliers and recipient are located in India, Copyright 2020. Accordingly, the same is taxable at 18% GST. Services supplied by the Central Government, State Government, Union Territory or local authority by way of renting of immovable property: A person registered under GST receiving service of renting of immovable property from Central Government, State Government, Union territory or local authority shall pay tax under reverse charge basis. You are already registered so you may migrate to GST and mention Gurgaon and Noida additional place of … renting out of any property by a Government or a local authority to a non-business entity. in India, Where supplier and recipient of service are in India and the immovable property is located outside India, Services provided in relation to immovable property including services provided by architects, interiors decorators, surveyors, engineers, Other experts or estate agents, service of grants of rights to use immovable property etc. In pre-GST era if a land lord is earning rent of more than Rs. 1. 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RCM on renting of immovale property is applicable only in case where renting services are provided by Central or State Government to a registered person. 10 Lakhs had to pay service tax to the government … From 25th Jan 2018 onwards (notif. Notification No. Yes. Upto 24th January 2018 - Renting of immovable property by govt agencies to business entities under Forward charge. 10000 per day, Mr. X is a resident of Mumbai, Maharashtra and has provided Architect service to Mr. Y of New York (USA) taxable value of such supply is Rs. Otherwise would remain under Forward charge. In respect of services other than – (i) renting of immovable property; (ii) services by the Department of Posts by way of speed post, express parcel post, life insurance, and agency services provided to a person other than Government; and (iii) services in relation to an aircraft or a vessel, inside The type of GST to be charged that’s is CGST and SGST or IGST shall depend on the place of supply of the service. 10/2017-IT (R) dated 28.06.2017, also provides certain exceptions i.e., the recipient is not required to discharge GST on receipt of the following services from the Central Government, State Government, Union Territory or Local Authority: renting of immovable property; Services provided by the Central Government, State Government, Union territory or local authority to another Central Government, State Government, Union territory or local authority are exempt from GST. For example; if the property is co-owned by two people then the limit is applicable to both. 6,00,000 (Charges per day is Rs. Seeks to amend notification No. The Notification No. As export of service is exempt under GST. Renting of immovable property for use in the course or furtherance of business or commerce is taxable under section 65 (105) (zzzz) of the Finance Act 1994. New York. Ans: No, you are not required to get GST registration because your turnover is below 20 lakh. Otherwise would remain under Forward charge. 1,20,000 (charges per day is Rs. But after implementation of GST the taxable limit is increased to  20 lakhs also the taxability of rent depends on from which type of property it has been earned. All Rights Reserved. Further direct charge (not RCM) would be applicable in case it is provided by a registered person. Seeks to amend notification No. Hence, Mr. X will charge Maharashtra State GST and CGST at the time of billing to Mr. Y. However, when the property is rented to an Unregistered person, the government would themselves deduct GST (Forward charge mechanism). 10 Lakhs had to pay service tax to the government on the taxable amount. In response to a recent application filed by M/s Karnataka Food and Civil Supplies Corporation, the Karnataka Appellate Authority of Advance Ruling (AAAR) maintained the order of Authority of Advance Ruling (AAAR) and stated that renting of commercial space in the immovable property will attract GST Rate 18% Grab the information of revised GST slab […] Renting of all other immovable properties would be taxable unless covered by an exemption. Upto 24th January 2018 - Renting of immovable property by govt agencies to business entities under Forward charge. 3,00,000, Service of renting of hall or Kalyanamandapam for Rs. (i) renting of rooms where charges are one thousand rupees or more per day; (ii) renting of premises, community halls, kalyanmandapam or open area, and the like where charges are ten thousand rupees or more per day; (iii) renting of shops or other spaces for business or commerce where charges are ten thousand rupees or more per month. (c) GST on services supplied by Central Government, State Government, Union territory/ local authority by way of renting of immovable property to a person registered under CGST Act, 2017 is payable under reverse charge. However, renting of property for commercial purpose is taxable under GST. There are two main parties in a lease agreement. On the other hand, if the property is rented to any unregistered person then the government will deduct GST on their own which is known as the Forwarding charge mechanism. Government of India Ministry of Finance All Rights Reserved. Immovable property includes premises, property rights (for example, inheritable building right), houses, land and associated goods, and chattels if they are located on, or below, or have a fixed address. 3/2018- Central Tax (Rate), GSR 66(E).– In exercise of the powers conferred by sub-section (3) of section 9 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, hereby makes the following further amendments in the notification of the Government of India, in the Ministry of Finance (Department of Revenue), No.