Everything You Must Know About GST on Rent

Since the times GST has come into picture, there is lot of confusion about it. To avoid receiving any GST notice, it is important that you are well aware of the tax rates and complications involved in this system. In this post, GST on rent in India has been discussed to bring more clarity on the subject so that you can manage your rental income as a landlord and pay the right amount as rent as a tenant.

Rate of GST on Rental Income

The first and the foremost thing we must understand is that the GST rate for rent is 18%. GST on rental income from commercial property and residential property is not same. This means that GST on rent paid on commercial property is 18% and residential properties have been exempted from this taxation. Therefore, a residential property that is used for residential purpose will only be exempted from GST and the residential property which is not used for residential purpose. For example, if it is a residential property which is being used as an office then in that case the GST will be levied at 18% and otherwise it will be tax-free.

GST Exemptions and Rent Limits

There are different rent limits that affect the GST on rent payments:

  • If the rent along with the services provided by the landlord is under the amount of Rs.20 lakhs and the landlord doesn’t have GST registration then GST on rent payment is exempted. But this limit is Rs.10 lakhs for certain states like Arunachal Pradesh, Assam, Himachal Pradesh, J&K, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura and Uttarakhand.
  • If any religious place meant for public use, owned by a religious trust or registered charitable trust, then the rent of that place is exempted if room rent is under Rs.1000 per day, shop rent is under Rs. 10,000 per month and rent for a community hall is under Rs. 10,000 per day. In case the rent exceeds the above mentioned amounts then GST will be applicable.

GST on Rent Payment: Important Points to Keep in Mind

  • There are three components of GST i.e. SGST, CGST, IGST
  • In intra-state transactions, SGST and CGST are levied
  • In Inter-state transactions, IGST is levied
  • If landlord is registered in the same state in which the property is also located then CGST and SGST will be levied at 9% each.
  • If landlord is registered in the same state of the property but tenant is registered in a different state then both CGST and SGST, both will be levied.
  • If landlord is registered in a different state and property is in a different state then in that case IGST will be levied at 18%.

So always keep these points in mind as a landlord and also as a tenant to keep things smooth and in synch with GST rules and regulations.

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