18% GST on House Rent!

Rule Doesn’t Apply to all the Tenants…

As per the new rule of goods and services tax (GST), tenants need to pay 18 percent Tax on house rent for renting a residential property.

On Friday, the government said that GST will not be applicable on residential units if they are rented out to private persons for personal use.

However, the government clarified that the GST would be levied only when the residential unit is rented out to a business entity.

According to a government statement it said, “No GST when it is rented to a private person for personal use. No GST even if the proprietor or partner of a firm rents residence for personal use," the government said.

Should know about the new rules which are applicable to the tenants; 

-A tenant will be liable to pay tax under the Reverse Charge Mechanism (RCM). The tenant can claim the GST paid under Input Tax Credit as a deduction.

-These are only applicable on GST-registered tenants including individuals and corporate entities.

-This will impact those companies and professionals who have taken residential properties on rent or lease.