GST on Rent of Residential and Commercial Property

Renting out a property is a common practice in India. As per the GST law, if you are a landlord, you will be required to pay the Goods and Service Tax (GST) on the rent you receive from your tenant. This is applicable to both commercial and residential properties. In this article, we will discuss in detail about GST on rent of residential and commercial properties.

What is GST?

The Goods and Service Tax (GST) is a value-added tax levied on the supply of goods and services in India. It is an indirect tax that replaced many indirect taxes in India. GST was introduced to simplify the tax structure and to make it easier for businesses to comply with tax laws.

When is GST applicable on rent?

According to the GST law, if you own a commercial or residential property and rent it out, you will be required to pay GST on the rent you receive. GST on rent is applicable if the monthly rent exceeds Rs. 20,000. If the monthly rent is below Rs. 20,000, GST is not applicable.

How is GST calculated on rent?

The GST rate on rent is 18%. To calculate GST on rent, you need to multiply the monthly rent by 18%.

For example, if the monthly rent is Rs. 50,000, the GST on rent will be:

GST on rent = Monthly rent x 18%

GST on rent = 50,000 x 18%

GST on rent = Rs. 9,000

So, the total rent payable by the tenant will be Rs. 59,000 (50,000 + 9,000).

What are the GST implications on rental income?

If you are a landlord, GST has a few implications on your rental income. You will be required to register for GST if your rental income exceeds Rs. 20 lakh per annum. Once registered, you will be required to file GST returns on a monthly or quarterly basis.

Additionally, if you are a landlord and your tenant is registered under GST, you will be required to issue a tax invoice for the rent you receive. This tax invoice will include the GST amount charged on the rent.

Can GST be claimed as input tax credit?

If you are a landlord, you can claim input tax credit against the GST paid on goods and services used for renting out the property. However, you cannot claim input tax credit on the GST paid on the purchase of the property.

Conclusion

GST on rent is applicable to both commercial and residential properties if the monthly rent exceeds Rs. 20,000. The GST rate on rent is 18%. If you are a landlord, you will be required to register for GST if your rental income exceeds Rs. 20 lakh per annum. You can claim input tax credit against the GST paid on goods and services used for renting out the property.