GST applicability on Rent

GST
1

Let’s assume for this discussion that,
(1) “Person A” owns a residential apartment.
(2) “Person A” rents his residential apartment to a “Company B Pvt. Ltd.”
(3) “Person A” is not GST registered and rent is his only source of income. Also his annual income/turnover is below Rs. 20 Lacs.
(4) “Company B Pvt. Ltd.” is registered under GST.

Considering above factors, can you please explain if GST will be applicable on rent?
If yes, then how and why?

2

Hey @ashish_shah,

As the annual income is below Rs. 20 Lakhs, GST will not be applicable, and hence a GST Registration is not required.

However, if the total income from rent exceeds Rs. 20 Lakhs, GST will be applicable at the rate of 18%.

3

@Surbhi_Pal
so if I understand it correctly, “Company B Pvt. Ltd.” is not required to deduct GST under RCM on their rent payment to “Person A", irrespective of “Company B Pvt. Ltd.” using rented apartment for either commercial or residential purposes, right?

4

Hi @ashish_shah,

There are two scenarios in this case, assuming that the landlord is not GST registered and the tenant is GST registered.

  1. If the property is being used for commercial purposes, the company is not required to pay GST.
  2. If the property is being used for residential purposes, RCM will be applied and GST needs to be paid by the tenant, that is, the company.

Hope this clarifies!

1 Like
5

@Surbhi_Pal

So,

  1. “Company B Pvt. Ltd.” using apartment for commercial purpose, then no GST payment required.
  2. “Company B Pvt. Ltd.” using apartment for residential purpose, then GST payment is required via RCM.

Is that what you are trying to say?

6

@ashish_shah

Yes, your understanding is correct. However, as mentioned previously, in case the apartment is being used for commercial purposes and the landlord’s annual income from rent exceeds Rs.20 Lakh, GST will be applicable and the same needs to be paid by the landlord.

7

So . The landlord has to take gst registration number ?

8

@HIREiN,

Yes, the landlord is required to get GST registered.

9

@Surbhi_Pal
your response sounds totally different than what’s mentioned in this video. https://youtu.be/DNE09LKSbkY?t=113

Is it possible for you to provide GST law section/s which support your answer?

10

Hey @ashish_shah,

I have replied based on my best understanding.

For an expert opinion on the matter, you can Ask an Expert.

Hope this helps!

11

A Factory is given on Rent.

Landlord is a Proprietary Entity and the Tenant is a Private Limited Company.

Yearly Rent is INR 5 Lakh.

Yearly Business Turnover of the Landlord is INR 3 Crore.

Landlord and Tenant, both are GST registered.

Whether RCM will apply or the Landlord himself has to pay GST under FCM.

12

Hey @cvijay,

In this case, the landlord is required to collect the GST from the tenant, that is, the Private limited company, and pay the same to the government under FCM.

1 Like
13

Ma’am, thank you so much for your prompt reply. Appreciated.