GST on Renting of Residential Property

This document covers

1. Taxes on Renting a Property
2. Upto 17th Jul 2022
3. W.e.f 18th Jul 2022
4. Exception from Jan 1st 2023

1. Taxes on Renting a Property

1. The income from the residential property rent is subject to taxes.
2. All along such income is considered under income from let-out property of income tax. Appropriate TDS to be deducted by the tenant and file TDS return if the total rental income is more than Rs. 2,40,000 per year or rent more than Rs. 50,000 per month.
3. GST on renting of residential property introduced in Jul 2022. This document covers in detail.

2. Upto 17th Jul 2022

1. Renting of residential properties for residential purposes is exempted from GST. GST is exempted on residential purpose irrespective of whether the landlord or tenant is registered or unregistered under GST.
2. However Renting of residential property for commercial purpose comes under GST and applicable GST rate is 18%. The landlord needs to get registered under GST if his threshold exceeds Rs 20 lakhs/10 lakhs depending on the state.

3. W.e.f 18th Jul 2022

1. The rules regarding renting of residential property have been amended w.e.f 18th Jul 2022 as per 47th GST council meeting. W.e.f 18th Jul 2022, GST is applicable on renting of residential properties for residential use to a registered person.
2. GST is payable on Reverse Charge Mechanism (RCM) on renting of residential property for residential purpose to a registered person

4. Exception from Jan 1st 2023

CBIC has issued an explanation on renting of residential property w.e.f 01st Jan 2023. If the proprietor of sole Proprietorship registered under GST takes a residential property on rent for residential purpose in his personal capacity, GST is not applicable w.e.f 01st Jan 2023