GST: If you live in a rented house and are GST registered then this news is important for you. In fact, now Goods and Services Tax of 18 per cent will be levied on the rent. To know about the new rules related to GST, stay with the news till the end.
In the month of July, the government announced to impose 18 percent GST on the rented house. In such a situation, now the question arises whether the rental property in which you live will be taxed? In fact, in the 47th meeting of the GST Council, it was decided to levy 18% GST on rent.
This decision was implemented on 18 July. Tax experts say that common people will not have to pay tax on rent. Such tenants will have to pay GST who use the rented house for their business purposes.
Tax was not levied on residential property till July 17 –
Chirag Chauhan, tax expert of CA Chauhan & Co Chartered Accountants, said that till July 17, 2022, no tax was levied on the rent of residential property. Earlier, it did not matter whether the tenant or the landlord was registered under GST or not.
The rules changed from 18 July. According to the new rule, if the tenant of a residential property is GST registered, then he will have to pay GST of 18% on the rent. This tax will be implemented under reverse charge mechanism.
GST registered, but personal use will not attract tax-
Tax expert Chauhan said that it is necessary to understand the specifics of the rule that the government has implemented. If transactions are done for business purpose under reverse charge mechanism, then GST will be applicable in such cases and 18% GST will be levied on the rent to the tenant. GST is not applicable if the rental space is used for personal purposes.
Let us understand this matter with an example-
Now let’s understand this matter with an example. Chartered Accountant Chirag Chauhan said that if a professional like content creator, chartered accountant, lawyer, who is GST registered and lives with his family in that rented house, then in such cases GST will not be levied on rent. This is because he is making personal use of the rented house. However, that business is not availing the benefit of claiming that rent in the ITR return. If in this case he avails the deduction in the income tax return on rent, then he will have to pay 18% GST.
When will GST not be applicable?
- If the tenant is not GST registered then he will not have to deposit GST of 18%.
- If the tenant is GST registered, but he is using the residential property for personal use, then GST will not be applicable.
- If the tenant is GST registered and is using the residential property for business, then he will have to pay 18% GST on the rent. In this case he can also avail tax benefit on rent.
