As per the GST laws, renting out of a property is considered as a supply of service and is, therefore, subject to GST. The GST on renting of immovable property by individuals has become a topic of much debate and confusion, especially in the case of residential properties.
Before we delve into the details, let us first understand what GST is.
GST stands for Goods and Services Tax, which is a comprehensive indirect tax that has replaced several indirect taxes in India. It is a destination-based tax that is levied on the supply of goods and services.
GST is divided into three categories - CGST (Central Goods and Services Tax), SGST (State Goods and Services Tax), and IGST (Integrated Goods and Services Tax). CGST and SGST are levied by the central and state governments, respectively, on intra-state supplies, while IGST is levied on inter-state supplies.
A lease or letting out of a property is considered as a service and is, therefore, subject to GST. However, not all properties are subject to GST. As per the GST laws, properties that are used for residential purposes are exempt from GST. This means that if an individual rents out a residential property, they do not have to pay GST on the rent received.
On the other hand, properties that are used for commercial purposes, such as office spaces, shops, etc., are subject to GST. If an individual rents out a commercial property, they have to collect GST from the tenant and deposit it with the government.
The GST on renting of commercial properties is calculated on the value of the rent received. The GST rate applicable is 18%, which is divided into CGST and SGST/UTGST. This means that if the monthly rent received is Rs. 50,000, the GST applicable would be Rs. 9,000 (Rs. 4,500 CGST and Rs. 4,500 SGST/UTGST).
It is important to note that the landlord is required to register for GST if the annual turnover from renting of commercial properties exceeds Rs. 20 lakhs. If the landlord fails to register for GST even if the turnover exceeds the threshold limit, they would be liable to pay a penalty.
In conclusion, GST on renting of immovable property by individuals depends on the type of property being rented out. Residential properties are exempt from GST, while commercial properties are subject to GST. The GST applicable on renting of commercial properties is 18%, and the landlord is required to register for GST if the annual turnover exceeds Rs. 20 lakhs.
Treatment of Statutory Dues under GST law for Taxpayers under IBC
SETTS CURBSTONES - GST RATES HSN CODE 6801
GST Rates and HSN Code for Mushrooms in India