GST -Goods and Services Tax were levied on commercial properties like offices or spaces leased or given on rent. Any tenant who is registered under the GST, must pay GST at 18 percent. The new GST rules will come into effect from July 18.
However, the 18 percent GST on rent paid will be levied from tenants registered under the GST.
Earlier, GST was not levied on rent or lease of residential properties by corporate houses or individuals. Subsequently, a GST- registered tenant will be liable to pay the tax under the reverse charge mechanism . However, the tenant can claim the GST paid under the Input Tax credit as a deduction.
Applicability
- The tax is applicable only when the tenant is registered under GST and liable to file GST returns.
- A person who is registered with GST, who carries out business or profession must incur 18 per cent GST on such rent paid to the owner.
- Under the GST law, registered persons include individuals and corporate entities.
Not Applicable
- Any common salaried person who has taken a residential house or flat on rent or lease, need not pay the tax.
- However, the owner of the residential property is not liable to pay the GST.
Rate of GST
- However, the GST registration is mandatory when a person carrying out business or profession reaches an annual turnover of more than the threshold limit.
- The limit under the GST law varies according to the nature and place of supply.
- The threshold limit for a registered person supplying services alone is Rs. 20 lakh in a financial year.
- A GST-registered person, who offers services from a rented residential property, will be liable to pay the tax at 18 per cent.
ALSO READ: GST Revenue Collection in December is 1.15 Lakh Crore, All time high
