In India, GST on rent depends on the property type and tenant's business status. But do tenants pay GST on rent? Rent paid by individuals for residential use is exempt from GST, even if the landlord is registered under GST. If the landlord is GST-registered (annual rent ≥ Rs. 20 lakhs for commercial properties), 18% GST is charged.
Do Tenants Have to Pay GST on Rent?
Tenant’s Liability:
Registered Businesses: Must pay GST if the landlord is unregistered, under Reverse Charge Mechanism (RCM).
Unregistered Tenants: No GST payable unless voluntarily registered.
GST applies only if aggregate rent exceeds Rs. 20 lakhs/year (Rs. 10 lakhs in special category states). No GST on residential rent, even for businesses (e.g., employee accommodations).
Who Pays GST?
Landlord: If registered, collects GST from the tenant.
Tenant: Pays under RCM if the landlord is unregistered (must be GST-registered).
Example: A company renting office space (Rs. 50,000/month) pays 18% GST (Rs. 9,000/month) if the landlord is registered.
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The applicability of Goods and Services Tax (GST) on rent depends on the type of property and the nature of the rental agreement. Coming back to your query, do tenants pay GST on rent. So, under the GST regime, which was implemented on July 1, 2017, residential rent is generally exempt from GST, while commercial rent is subject to GST.
Do Tenants Have to Pay GST on Rent?
Tenants renting residential properties, such as apartments and houses, do not pay GST on the rent. This exemption is in line with the government's intention to promote affordable housing. Therefore, if you’re renting a home, the landlord cannot charge you GST on the rent.
On the other hand, GST applies to commercial properties, including offices, shops, and other business-related spaces. The GST rate for commercial rentals is typically 18%. In this case, landlords are required to register under GST and issue a GST invoice for the rent charged. Tenants in commercial spaces will need to pay this GST in addition to the base rent.
In some cases, if the landlord is unregistered under GST, the tenant may have to pay GST under the Reverse Charge Mechanism (RCM). This situation typically arises when the landlord’s aggregate turnover is below the GST threshold limit, making them ineligible for registration.
Tenants who pay GST on commercial rent may be eligible to claim Input Tax Credit (ITC) on the GST amount paid, which can offset their tax liability on goods and services used in their business.
I hope you found the answer helpful.
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2024-09-24T20:25:44+00:00 2024-09-24T20:25:45+00:00Comment
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