Among the reports about 18 percent GST On house rent to tenants, the government on Friday clarified that residential unit rent is taxable only if it is let out to a commercial unit, and said no. goods and services Tax shall be levied when it is let out to a private person for personal use. It states that even if the owner or partner of a firm lets out a house for personal use on rent, GST will not be levied.
As per the recommendations of the 47th GST Council meeting, which has come into effect from July 18, a GST-registered tenant will have to pay a Goods and Services Tax of 18 per cent for renting a residential property. However, input tax credit in respect of such transactions can be claimed on the basis of personal use.
Claim: 18% GST on house rent to tenants #pybfact check
Residential unit rent is taxable only when it is let out to business unit
No GST when it is let out to private person for personal use
No GST, even if the owner or partner of the firm provides accommodation for personal use on rent pic.twitter.com/3ncVSjkKxP— PIB FactCheck (@PIBFactCheck) 12 August 2022
“It is a welcome clarification by the government that will prevent unnecessary panic where people were under the misconception that residential rent of immovable property to unregistered persons would also attract GST,” said Abhishek Jain, Partner (Indirect Taxes), KPMG in India.
He added that more importantly, this clarification provides much-needed relief to the GST registered proprietors or partners in GST-registered firms who rent immovable property for their personal use, such as one for family accommodation. Renting a house, in which case the government has rightly clarified that GST will not apply.
Earlier, only commercial properties such as offices or let-out retail spaces attracted GST.
Pranjal Kamra, CEO, Finology Ventures said, “The earlier iterations of the GST rules imposed tax on commercial properties like offices, retail spaces etc. However, within the ambit of the new rules, rent was paid for residential property on business. GST will also be levied. Tax liability will fall only on GST-registered assessees, i.e., individuals/firms who are already liable to file their GST returns; but not owners of residential property.”
He said the new rules would make taxable businesses dealing in residential properties, who would use their own homes or similar properties, to avoid paying GST under the previous version of the GST rules.
The GST Council, which held its 47th meeting at the end of June, also decided to accept the interim report of the Group of Ministers on reversal of duty and improvement in exemptions. Pre-packaged and pre-labeled retail packs including curd, lassi and butter milk were brought under GST from July 18.
It also decided to levy 5 per cent GST on hospital room rent, excluding intensive care unit (ICU), exceeding Rs 5,000 per day per patient, without input tax credit. The council also decided to levy 12 per cent GST on maps and hydrographic or similar charts of all types, including atlases, wall maps, topographical plans and globes.
It was also decided to levy 18 per cent GST on the charges levied by banks for issuance of checks (in loose or book form). To bring hotel rooms under 12 per cent GST slab under Rs 1,000 per day as opposed to tax exempt category at present.
The GST on petroleum/coalbed methane has been increased to 12 per cent from the earlier 5 per cent. The tax on e-waste has also been increased from 5 per cent to 18 per cent. GST exemption on services provided by RBI, IRDA, SEBI, FSSAI and GST has also been withdrawn. The tax on scientific and technical equipment supplied to public funded research institutions has been increased from 5 per cent to the “applicable rate”.
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