GST on renting of Residential Property

Is there GST on the renting of Residential accommodation?

In one word, the Answer is a ‘No’!

But, there is more to it. There is no GST on the renting of Residential Property for use as a Residential Accommodation. But if the same is to be used for Commercial purpose, the GST is applicable.

But, there is still more to it.

In fact all ‘Real Estate Services’ have been duly recognized as a Taxable Supply under GST law and fall under the Heading 9972 of the ‘Scheme of Classification of Services’ under GST. The ‘Real Estate Services involving own or leased Property’ have been grouped under 99721 and the Service of ‘Rental or Leasing Services involving own or leased Residential Property’ falls under 997211.

However, the GST rate on the ‘Service by way of Renting of Residential Dwelling for use as Residence’ is NIL.

But if rented out to someone who carries out any commercial activities, the rental value is taxable at your hand @18%.  …if your total taxable supplies had exceeded Rs.20 L during the last/ preceding Financial Year.

WHAT IF YOU YOURSELF USE YOUR RESIDENTIAL PROPERTY FOR COMMERCIAL USE?

If you’re yourself using your own residential property for any commercial purposes, GST is applicable on the commercial activity, if it is not otherwise exempt i.e. if it is taxable per GST law.

But, there is still more to it.

The renting of your property for commercial use by the rentee or putting the renting property to commercial use yourself, is taxable only if the value of the total such services/ activities (‘supplies’ in GST parlance) by you during last/ preceding FY had exceeded Rs.20 Lakhs.

Thus, if the value of commercial activity was, say, 6 Lakhs in 2019-20,

And

The rent received through renting of Residential property for residence purpose was Rs.15 Lakhs in 2019-20, you were required to pay 18% GST on Rs. 1 Lakh value of commercial activity last year (i.e. during 2019-20).

Also, you’re required to pay GST @18% on the entire supply of commercial service made/ to be made in 2020-21 (if it is not exempt/NIL-rated under GST law)

This is, because renting of Residential property for residence purpose is taxable under GST, but NIL-rated.

Last, but not the least, for counting your total supplies even the value of non GST supplies has to be counted in. Supply of liquor is one such non-GST supply. It is not taxable under GST being an exclusively state subject.