GST Liability on Renting of Residential, Commercial or Industrial Units including Paying Guest (PG) and Hotel Facilities

The tax environment underwent a major shift in 2017 with the introduction of the Goods and Services Tax (GST), especially with regard to rental income. Under GST, renting a property—residential or commercial—is now regarded as a taxable supply of service. It is therefore essential to comprehend the subtleties of GST on rent. This article examines the tax rates and provisions that apply to the GST on rent of residential property, the GST on rent on commercial property, the GST on rent computation for rental properties, the ITC on rental services , etc. What Does GST Mean for Rent? The 2017 introduction of the Goods and Services Act, or GST, was the first. Numerous modifications were made to the rental income tax structure with the implementation of the Goods and Services Tax (GST). Renting out real estate is regarded by GST as a taxable supply of services, and both renters and landlords are responsible for paying their share of taxes. GST is applied to the landlords’ rental revenue. A proportion of the rental income is used to compute the tax. GST is additionally due on the rent amount by the tenants who pay it. The landlords deposit this tax to the tax department on the tenant’s behalf, and it is included in the total rent. Does GST apply when a property is rented out? The GST Act would classify the rental of an immovable property as a service supply. However, GST will only be applied to specific kinds of rent, like: When real estate is leased, rented, granted an easement, or granted a license to inhabit When any type of property—whether fully or partially—is leased out for business purposes, whether it be an industrial, commercial, or residential property Since this kind of rental is regarded as a service provision, taxes would apply. A residential property is GST-exempt when rented out for residential use alone. Any other kind of lease or renting out immovable property for business purposes would be considered a provision of services and would be subject to 18% GST. When residential property is rented out for personal use as a place to live, there is no GST. During the 48th meeting of the GST Council, it was made clear that if a registered person rents a residential property for their own use and personal use, there is no GST that needs to be paid. This indicates that no GST will be charged in cases where a registered person who owns a proprietorship firm rents out a residential property for their personal use as their residence in their individual capacity (as opposed to the proprietorship’s).