Recently, my childhood friend asked me, is GST applicable on commercial property rent? Yes, Goods and Services Tax is applicable on rental income from commercial properties in India. In the case of a business property, the renter, who is responsible for paying the rent, must also include 18% GST in the rate. Let me tell you more about this below.
Does GST Applies on Commercial Property Rent?
Under the GST regime, renting out commercial properties, such as offices, shops, warehouses, and factories is considered a supply of service and attracts GST at a rate of 18%.
The rate I mentioned is typically divided equally between Central GST (CGST) and State GST (SGST). Each at 9% for intra-state transactions.
For inter-state rentals, Integrated GST (IGST) at 18% applies.
Landlords are required to register for GST if their aggregate turnover, including rental income and other taxable supplies, exceeds:
Rs20 lakh per annum in most states.
Rs10 lakh per annum in special category states (e.g., northeastern states).
Once registered, landlords must charge GST on the rent collected from commercial properties. I hope you found this helpful.
Get GST Registration Done for Your Commercial Property by Experts ant NoBroker.
Also read
How to Avoid GST on Rental Income
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“Is there GST on commercial rental income” is what I was asking my father yesterday. He told me that yes, you are required to pay GST and that the threshold limit of GST applicable on rent (commercial purposes) is 20 lakhs.
Let me explain this using an example:
Sakshi who stays in Delhi owns property in Hyderabad. Now, an organization ABC rents it out from her and starts using it as a guesthouse. They are paying a monthly rent of Rs. 20K. Now, the annual rental income of Sakshi would be Rs. 2.4L. Therefore, Sakshi won’t have to pay GST on rent, as it comes under the limit.
GST on Renting of Immovable Property for Commercial PurposeIf you rent out an immovable property for a commercial or business purpose, then you will be required to pay GST on commercial rental income. In this case, the rate of GST would be 18 percent on the taxable value. Now, Sakshi (the owner) would apply GST as well as the division of GST on rent on commercial property in this manner:
Intra-State TransactionMonthly rental Income of Sakshi: Rs 2,50,000
Addition of SGST at 9 percent: Rs. 22.5K
Addition of CGST at 9 percent: Rs. 22.5K
Total Invoice amount: Rs 2.95L
Inter-state TransactionMonthly rental Income of Sakshi: Rs. 2.5L
Addition of IGST at 18 percent: Rs. 45K
Total Invoice amount: Rs. 2.95L
I hope now you have an answer to “Is GST applicable on rental income from commercial property”
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is GST applicable on rental income from commercial property
Neel
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2021-12-07T18:26:56+00:00 2021-12-09T12:16:44+00:00Comment
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