Earlier, there was no GST levied on corporate houses or individuals for renting or taking a residential property on lease.
New Delhi: According to the new GST rules, a tenant registered with GST will have to pay the Goods and Services Tax at 18% for taking a residential property on rent. The new rule is effective from July 18.
Earlier, there was no GST levied on corporate houses or individuals for renting or taking a residential property on lease. Those registered under GST will be liable to pay tax under the reverse chare mechanism. The tenant can claim the GST paid under Input Tax Credit as a deduction.
It was also made clear that the owner of the property is not liable to pay GST.
Registration under GST is mandatory when the annual turnover reaches more than the threshold limit. The limit varies from services offered and the place. For a registered person supplying only services, the threshold limit is Rs 20 lakh a year. The limit for a supplier of only goods is Rs 40 lakh. Meanwhile, if the registered entity is located in any of the northeastern states of India or any of the special category states, the threshold limit is Rs 10 lakh per financial year.
Who will this affect?
The changes, implemented after the 47th meeting of the GST Council, will impact companies and professionals who have taken residential premises on rent or lease.
The new rules will affect a company’s cost incurred to house its employees in free accommodations. The rent paid to use residential properties as guest houses or homes will attract 18 percent GST.
