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Homechevron_rightBusinesschevron_rightNew rules mandate...

New rules mandate tenants to pay 18% GST on housing rent

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New rules mandate tenants to pay 18% GST on housing rent
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The new Goods and Service Tax rules demand upon a registered tenant to pay an 18 per cent tax for renting properties, including residential.

As per the rules, the GST on rents has come into effect from July 18. The rules, however, exempt property owners from paying the GST.

Earlier, the GST was applicable only to rent of properties meant for commercial purposes where renting for residential purposes had been exempted.

The reverse charge mechanism (RCM) under the new GST rules mandates a GST-registered tenant to pay the tax for the services. At the same time, the tenant has the option to reclaim the GST paid under the Input Tax Credit as a deduction.

According to experts, the 18 per cent GST on property rent does not apply to an ordinary tenant or a common salaried person. The GST rule applies only to those GST-registered individuals who do business or Income Tax paying persons.

Under the GST law, registered persons include individuals and corporate entities. The GST registration is mandatory when a person carrying out business or profession reaches an annual turnover of more than the threshold limit.

Experts also noted about the applicability of the GST on rental properties what they say will varies according to the nature and the place of supply.

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TAGS:GSTeconomybusinessInflation
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