Applicability of GST on rent

May 16, 2024

Applicability of GST on rent depends on the type of property and the tenant’s registration status under GST:

Residential Rent:

  • Renting a house for residential purposes is exempt from GST. This applies to both the landlord and tenant.

Commercial Rent:

  • Renting a property for commercial purposes (shops, offices, warehouses) attracts GST at 18% on the total rent.
  • The landlord is responsible for paying GST on the rent received.
  • However, there’s an exemption for small taxpayers with an annual turnover below Rs. 20 lakhs. They are not required to register under GST and hence don’t pay GST on rent.

GST on Residential Rent for GST-registered Tenants (Change from July 2022):

  • If you are a tenant registered under GST and use the rented residence for business purposes, a new rule applies from July 18th, 2022.
  • In this scenario, you need to pay GST at 18% on the rent under the reverse charge mechanism.
  • This means you’ll be liable to pay GST while filing your GST return.

In summary:

  • Residential rent for residence – Exempt from GST
  • Commercial rent – 18% GST on rent for landlord (except for small taxpayers)
  • Residential rent for business purposes by GST registered tenant – 18% GST payable by tenant under reverse charge mechanism (applicable from July 18th, 2022)

    Sources: CAclubindia Gemini

Mr. Nipun Khanna is the founder of this firm- Startup Solicitors LLP