The decision to bring the renting of residential dwellings under the tax net was taken in the 47th GST Council Meeting. Renting an immovable property is considered a supply of service and it attracts GST @ 18%.
Here are few pointers related to the applicability of GST on rented residential property:
- GST will not be applicable/exempted if the residential property is rented out to an unregistered person.
- GST will be applicable if the residential property is rented out to a registered person under GST.
- Liability to pay GST @ 18% under the reverse charge mechanism will arise on the tenant.
- If the supplier (landlord/lessor) is registered under GST, then it will be shown as outward supplies liable to be taxed under the reverse charge mechanism.
- If the supplier (landlord/lessor) is not registered under GST. Liability to pay GST is on the recipient(tenant/lessee), hence no additional GST liability or any compliance under GST.