GST on Rental Income

Main points –

·       It has been clarified that no GST would be levied on renting out of property for residential purpose. This means if you own a house or flat and you have given that on rent, you need not worry about GST at all as rental income from residential property has been exempt from GST.

·       The threshold limit of Rs 20L (Rs 10L in special states) to continue. This means if your turnover from renting services is lower than the threshold limit, you are out of ambit of GST and no GST would be levied.

·       GST would be levied only when you have rented out property for commercial purpose and are receiving more than Rs 20 L as rent.

·       Rate of GST will be 18%.

So the summary is,

Type of property - Residential - Exempt from GST

Type of property - Commercial - Exempt if rent receives is less than Rs 20 lakhs.

Reverse charge –                                                                                                

·      The GST says that if a registered person receives goods or services from an unregistered person , he will be bound to pay GST on reverse charge basis.

·       This means, if the lessee is a registered person, while lessor is an unregistered person, lessee will be liable to pay GST on reverse charge.

Input Tax Credit –

·       Now dealers, traders, and business people will be eligible to claim input tax credit on taxes paid on rent.

·       This facility was not available in the earlier service tax regime.

·       This will help to cut costs as ITC of rent paid will decrease the effective rent expenses.