GST on Renting immovable Property w.e.f. 10.10.2024

GST on Renting immovable Property w.e.f. 10.10.2024 

The GST law on immovable property rent has been amended to attract GST on commercial and residential real estate property. the CBIC proposed GST for renting commercial property by unregistered taxpayers to registered taxpayers under the Reverse Charge Mechanism, RCM on the 54th GST Council meeting.

We are discussing here the tax liability on the above type of property according to the provisions outlined in the new notification.

 Provision of GST on Immovable Property

Rent on residential dwelling for residence purposes is exempted as per Nofication no.  09/2017-Intergrated Tax (Rate)

Rent on commercial property by a registered person to a registered/ unregistered     person is liable to GST under Forward Charge.

Rent on  commercial property by an unregistered person to a registered/ unregistered person was not liable to GST

18th July, 2022

The Reverse charge is applicable on the renting of residential dwellings to registered persons by any person, as per Notification No. 05/2022 Central Tax (Rate) dated 13th July 2022, effective from 18th July 2022.

Reverse Charge Mechanism will apply in case of Service by way of renting of residential dwelling to a registered person as indicated under Entry No. 5AA, applicable from any person to any registered person.

10th October, 2024 

As per Notification No. 09/2024 – Central Tax (Rate) dated 8th October 2024, w.e.f. 10th October 2024, GST is levied under RCM on services by way of renting of Immovable(any) property, other than a residential dwelling, if supplied by an unregistered person to a registered person.

 

Possible situations of let out immovable property including taxability are as follows

 

GST on Residential Property:

 

Service Provider	Service Recipient	Use of Property	Taxability
Registered Person	Registered Person	Residential/Commercial	Taxable under RCM
Unregistered Person	Registered Person	Residential/Commercial	Taxable under RCM
Registered Person	Unregistered Person	Residential Purpose	Exempted
Registered Person	Unregistered Person	Commercial Purpose	Taxable under Forward Tax
Unregistered Person	Unregistered Person	Residential/Commercial	Exempted

 GST on Commercial Property

Service Provider	Service Recipient	Taxability
Registered Person	Registered Person	Taxable under Forward Tax
Unregistered Person	Registered Person	Taxable under RCM
Service Provider	Service Recipient	Taxability
Registered Person	Registered Person	Taxable under Forward Tax
Unregistered Person	Unregistered Person	No GST is applicable

 

Conclusion

We can say that "GST on Renting immovable Property w.e.f. 10.10.2024"for the government intends to impose GST on all the rentals of immovable properties. According to the latest notification, the renting of immovable properties comes under GST, either forward charge or the reverse charge mechanism, unless an exemption is applicable. And the exemption shall apply only in the case of renting of residential property when supplied to an unregistered person for residential purposes.