Let us talk about the leasing, now a days people purchase properties as a prominent source of Income and future investment, these was considered by government in Framing of Income Tax provision, thus generating crores of Revenue for government in the form of Taxes.

Earlier Under Central Tax Rate, Services by way of renting of residential dwelling for use as residence was exempt. However Now, an Amendment has been made related to the same and now residential dwelling (SAC: – 997211) is brought under the purview of GST Act w.e.f 18.07.2022

Let us understand how GST is applicable on Renting services

As per the changes, any services by way of renting of residential dwelling to a GST registered person for either residential or commercial purpose, shall attract GST and is to be paid under Reverse Charge Mechanism (RCM) in the hands of the GST Registered person who is the recipient of such services. It is irrelevant whether the supplier of rental service of such residential dwelling is registered under GST or not.

Note: – Property rented for Residential purpose in furtherance of business includes property took on rent by business houses for the purpose of providing it to their employees for residential purpose and any other such purposes etc.

Note: – If Composition taxpayers takes a residential dwelling, he cannot claim ITC for GST paid under reverse charge by a composition dealer as per section 10(4).

These changes might seem to be complex, but when someone is dealing in such cases where there is involvement of Residential Dwellings, above points to be considered before getting in to such transactions.



Mihir Jain

Associate Consultant |+919821700600|mihir.jain@masd.co.in|LinkedIn Profile

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