GST on Residential Property

GST on Residential Property

As per the new rules w.e.f. July 18, 2022, if the tenant of the residential property is GST-registered, he has to pay 18% GST irrespective of the fact that the landlord is GST-registered or not. The payment of the GST shall be made under the reverse charge mechanism (RCM), which means that the tenant shall directly pay the GST to the government.

The new rule will have an effect on GST-registered tenants. For example, if a company takes a guesthouse on rent or if a company takes a residential property on rent for the sake of its employees, then the company has to pay 18% GST. However, if the employee directly takes a resident takes a residential property on rent, he is not liable to pay GST.

Tenants who are GST registered must pay GST when renting a residential property. The tenants registered under GST may include companies; small businesses doing business in residential property; online content creators who shoot videos, etc.; and business professionals like CAs, lawyers, architects and business consultants.

Cases in which GST is not payable by Tenants:
  1. On Residential Property Tenants who are not GST registered are not required to pay GST when renting a residential property.
  2. The salaried class person is not required to pay GST when renting a residential property.





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