Immovable Property Renting- GST Law - Place of Supply Registration

When a person rents out a property, either commercial or residential, he is liable to pay Goods and Services Tax (GST) on the rental income. The GST law on immovable property renting is a bit complex and requires a thorough understanding. In this article, we will discuss all the key aspects of immovable property renting under GST law, including place of supply, registration, and other compliance-related issues.

Place of Supply

Place of supply is an important aspect of GST law when it comes to immovable property renting. According to the CGST Act, 2017, the place of supply in case of immovable property renting is the location of the property. Hence, if a person rents out a commercial property in Delhi, the place of supply will be Delhi, and the GST will be charged accordingly.

However, there are some exceptions to this rule. If the recipient of the rental service is registered under GST, then the place of supply will be the location of the recipient. For example, if a registered company in Mumbai rents a commercial property in Delhi, the place of supply will be Mumbai, and GST will be charged accordingly.

Registration

Any person whose aggregate turnover in a financial year exceeds Rs 20 lakhs (Rs 10 lakhs for special category states) is liable to register under GST. However, in the case of immovable property renting, the threshold limit is reduced to Rs 10 lakhs (Rs 5 lakhs for special category states).

Further, if a person is providing services in more than one state, then he is liable to register under GST in each of those states. Hence, a person who is renting out properties in Delhi and Mumbai will have to register under GST in both Delhi and Mumbai.

Input Tax Credit (ITC)

A person who is renting out an immovable property is eligible to claim input tax credit (ITC) on the GST paid on the goods and services used for providing the rental service. However, there are some conditions that need to be fulfilled for claiming ITC:

1. The person should be registered under GST

2. The goods and services on which ITC is claimed should be used for providing the rental service

3. The person should possess a tax invoice or a debit note issued by the supplier of goods or services

If the above conditions are fulfilled, the person can claim ITC on the GST paid on the goods and services used for providing the rental service.

Compliance

Compliance with GST law is mandatory for all persons who are liable to pay GST. In the case of immovable property renting, the following compliance-related issues are important:

1. Filing of returns: A person is required to file GST returns on a monthly basis. The returns need to be filed by the 20th of the subsequent month.

2. Payment of tax: The tax liability needs to be paid on a monthly basis by the 20th of the subsequent month.

3. Maintenance of records: Proper records need to be maintained of all the rental transactions, including invoices, receipts, and other relevant documents.

Conclusion

Immovable property renting under GST law is a complex issue and requires a thorough understanding of the law. In this article, we have discussed all the key aspects of immovable property renting under GST law, including place of supply, registration, and other compliance-related issues. Any person who is renting out an immovable property should ensure that he complies with all the provisions of the GST law to avoid any penalty or legal action.