Till now, only commercial properties such as offices or retail spaces on lease were subject to GST on lease. But now those tenants who are registered under GST will also have to pay 18 percent GST along with the rent.
New Delhi. Now tenants residing on rent of residential property will have to pay 18 percent GST along with the rent. This decision has come into effect from July 18 last month. But in this decision it has been said that only those tenants who are registered under GST for a business and who fall in the GST payable category will have to pay this tax.
As per the earlier rule, the lease of commercial property such as office or retail space on rent was subject to GST. There was no GST on residential property whether taken on rent by a corporate house or a normal tenant.
Tax to be paid under RCM
According to a report by NDTV, according to the rules which have come into effect from July 18, 2022, the GST registered tenant will have to pay tax under the reverse charge mechanism (RCM). He can claim GST by showing deduction under Input Tax Credit.
Also, let us tell you that this 18 percent GST will be applicable only if the tenant is registered under GST and falls in the category of filing GST returns.
GST will be based on turnover
Under the new GST law, the category of registered tenant will include all general and corporate entities. It is mandatory for the business owner to get GST registration if the annual turnover reaches above the prescribed limit. What is the prescribed limit, it depends on that business. The annual limit for business owners providing services is Rs 20 lakh.
At the same time, for business owners selling or supplying goods, this limit is Rs 40 lakh. However, if this tenant resides in the North-Eastern states or a state with special status, then the prescribed turnover limit for him is Rs 10 lakh annually.
The cost of companies will increase
This new change, implemented after the 47th meeting of the GST Council held in Chandigarh, will have an effect on such companies or businessmen who have taken residential property on rent or lease for their business. At the same time, such companies will also bear this cost by renting the residential property to use it as a guest house or provide accommodation for the employees. This will increase the cost on companies giving free accommodation to employees.
We have taken all measures to ensure that the information provided in this article and on our social media platform is credible, verified and sourced from other Big media Houses. For any feedback or complaint, reach out to us at businessleaguein@gmail.com
