Is RCM Applicable On Rent?

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RCM on commercial rent under GST

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Reverse Charge Mechanism (RCM) is applicable to certain types of rent. It is a mechanism where the buyer of the goods or services is liable to pay the GST instead of the supplier. It is applied when the government wants to shift the tax liability from the supplier to the buyer.

In the context of

RCM on rent paid

rent, there are following types of rent:

• If you are renting a motor vehicle for business purposes, RCM is applicable.

• It is also applicable on renting of an immovable property like land, building, etc. If the landlord is not registered under GST. The tenant is required to pay GST under RCM.

This is all about

RCM on rent paid to unregistered persons.

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Prior to July 17, 2022, there was no GST on the rent of residential property, but as of that day, the government began charging the RCM on rent under GST, with the tenant being required to be registered for GST.

Is RCM applicable on rent?

Regardless of the amount of rent, a renter who is registered for GST is required to pay GST on residential property rent. The landlord is not required to pay the GST on the rent of the residential property.

Some situations in which a tenant has to pay the GST under RCM:

• If a person or business that is GST-registered rents a home to one of its officers or employees.

• If a residential unit is rented out to a GST-registered business or individual for his visitors

• If, during the redevelopment of societies or any properties, a GST-registered firm or individual offers the landlords alternative housing

• If a residential property is rented by a GST-registered business or individual for his proprietor or partner 

If a tenant rents a residential property from a landlord who is registered under GST, regardless of the rent amount, the use of the property, or the landlord's status, the landlord must pay GST on the residential rent under RCM. I hope this clarifies your query about, whether Is RCM  applicable on rent under GST?

A registered person would be subject to Reverse Charge Mechanism for GST on any rent for immovable properties that are assessed by a public or local body. On the other hand, the government would impose a GST (Forward charge mechanism) deduction when the property is rented to an unregistered individual.

I’d like to conclude my answer here about the  RCM on rent under GST. I hope this helps:)

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The answer to the query, “Is RCM applicable on rent under GST?” is Yes! There was no Tax on the rent of residential property up to July 17, 2022, but after that date, the government began charging the GST on the rent of residential property through the RCM (Reverse Charge Mechanism), subject to the need that the tenant is registered for GST. Regardless of the amount of rent, a renter who is registered for GST is required to pay Tax on residential property rent. The landlord is not required to pay the GST on the rent of a residential property.

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• If a GST-registered business or individual rents a home for his workers or officials

• If a residential property is rented out for a visitor by a GST-registered business or individual

• If the landlords are given alternative accommodations during the redevelopment of societies or any assets by a GST-registered company or individual

• If a residential property is rented out to a GST-registered business or individual by the owner or a partner

No, there is no reverse charge applicability on rent for commercial property.

No matter the rent amount, the property's intended use, or the landlord's status as a registered GST landlord, if the tenant is a registered GST tenant and rents a residential property, he is required to pay the GST on residential rent under RCM.

I’d like to conclude my answer here about, is RCM applicable on rent under GST. I hope this helps:)

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