Key Scenarios for GST on Rent
Type of Property | Usage | Tenant Status | GST Applicable? | Rate | Who Pays? |
|---|---|---|---|---|---|
| Residential | Personal Use/Residence | Unregistered Individual | No (Exempt) | Nil | N/A |
| Residential | Personal Use/Residence | Registered Business | Yes (under RCM) | 18% | Tenant |
| Residential | Commercial/Business Use | Any (Registered or not) | Yes | 18% | Landlord (FCM) |
| Commercial | Any Use | Registered Business | Yes | 18% | Landlord (FCM) or Tenant (RCM) |
| Commercial | Any Use | Unregistered Individual | No (if landlord is below threshold) | N/A | N/A |
Important Details
- Residential Property for Personal Use: Rent paid for a residential dwelling used solely for personal accommodation is fully exempt from GST. This applies even if the landlord is GST-registered.
- Commercial Property: Renting out commercial properties (shops, offices, warehouses, etc.) is considered a supply of service and is generally subject to an 18% GST.
- Reverse Charge Mechanism (RCM):
- If a GST-registered business (tenant) rents any property (commercial or residential) from an unregistered landlord, the tenant is liable to pay the 18% GST directly to the government under the RCM.
- The tenant can generally claim an Input Tax Credit (ITC) for this GST paid, provided the property is used for business purposes.
- Threshold Limit: Landlords (who are not under RCM conditions) must register for GST and collect tax only if their total annual income from all taxable activities (including commercial rent) exceeds ₹20 lakh (₹10 lakh in special category states).
- TDS vs. GST: Tax Deducted at Source (TDS) on rent under the Income Tax Act is a separate matter from GST and applies to annual rents over ₹2.4 lakh (applicable from F.Y. 2024-25, previously ₹1.8 lakh).
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