Earlier, rent of residential properties till July 17, 2022 was exempted from GST irrespective of whether the tenant or landlord is registered or not. But from July 18, a tenant who is registered will be liable to pay GST on renting a property for residential purposes.
Are you a tenant and registered with the Goods & Services Tax (GST) system? From July 18, you will have to pay 18 per cent GST on the rented residential property, as per the recommendations of the 47th GST Council meeting. However, the tenants can claim this as a deduction while paying tax on the sales in the returns, Mint reported.
Earlier, rent of residential properties till July 17, 2022 was exempted from GST irrespective of whether the tenant or landlord is registered or not. But from July 18, a tenant who is registered will be liable to pay GST on renting a property for residential purposes.
The tax will be paid by such tenants under the reverse charge mechanism (RCM).
Archit Gupta, founder and CEO at Clear, told the website that if any common salaried person has taken a residential house or flat on rent, they don't need to pay GST.
“However, a GST-registered person who carries out business or profession must incur 18 per cent GST on such rent paid to the owner,” Mint quoted Gupta.
Usually, GST registration is needed when an annual turnover of a business or profession is more than the threshold limit under the GST law.
The Goods and Services Tax (GST) was introduced in 2017 by the Narendra Modi government. In July, the GST collection rose to 28 per cent to touch the second-highest level of ₹1.49 lakh crore, PTI reported.
The GST collection had stood at ₹1,16,393 crore in the same month a year ago.
The collections had touched a record high of ₹1.68 lakh crore in April, 2022.
This is the sixth time that the monthly GST collection crossed the ₹1.40-lakh-crore mark since the inception of GST and fifth month at a stretch since March 2022, the ministry said in a statement.