Immovable Property Renting- GST Law - Place of Supply Registration

With the implementation of Goods and Services Tax (GST), there have been significant changes in the tax system of India. The introduction of GST has brought in a lot of clarity for various types of businesses. The real estate industry is one of the sectors that have been affected the most by the new tax system. One of the major changes that have been brought in by GST is in the tax treatment of immovable property renting. In this article, we will take a look at the GST law related to immovable property renting, the place of supply and registration.

Overview of GST on Immovable Property Renting

Before the implementation of GST, service tax was applicable on renting of immovable property. However, post the implementation of GST, the tax treatment has changed significantly. Under GST, renting of immovable property is treated as a supply of services and is liable to GST. The rate of GST applicable on renting of immovable property is 18%.

The definition of renting of immovable property under GST is quite broad. It includes renting, leasing, licensing or other similar arrangements of immovable property for use in the course or furtherance of business or commerce. The scope of the definition is quite wide and includes all types of immovable property such as buildings, land or any other type of property.

Place of Supply for Renting of Immovable Property

The place of supply is an important aspect of GST as it determines the tax jurisdiction for a transaction. The place of supply for renting of immovable property is determined based on the location of the property. If the property is located in India, the place of supply is India and GST is applicable. If the property is located outside India, the place of supply is outside India and GST is not applicable.

However, there are certain exceptions to this rule. If the recipient of the service is located outside India, the place of supply is considered to be outside India. In such a case, GST is not applicable. Similarly, if the recipient is located in a Special Economic Zone (SEZ), the place of supply is considered to be outside India and GST is not applicable.

Registration for Renting of Immovable Property

All entities engaged in the business of renting of immovable property are required to register under GST. The threshold limit for registration under GST is Rs. 20 lakhs. However, if the entity is engaged in the business of supplying taxable goods or services, the threshold limit for registration under GST is Rs. 10 lakhs.

It is important to note that even if an individual is renting out a property for personal use and not as a part of a business, GST is not applicable. GST is only applicable if the renting of immovable property is done in the course or furtherance of business or commerce.

Conclusion

The GST law related to immovable property renting is quite complex and requires a thorough understanding of the rules and regulations. It is important for all entities engaged in the business of renting of immovable property to comply with the law and register under GST. Failure to comply with the law can result in penalties and legal action.