[ecis2016.org] Those earning a rental income through their properties for commercial purposes are liable to pay GST. This article elaborates on various aspects of this tax liability.
Those selling goods or offering any services need to pay GST on their income above a specific amount. GST on goods or services is also applicable to rental income.
What is GST on rent?
Under the tax framework, renting your property is viewed as an extension of service. This makes GST on rental income applicable under the Goods and Services Tax (GST) law that was launched in July 2017. Rent is now treated as a taxable supply of service under the GST regime.
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Applicability of GST on rent
Applicability of GST on rent is determined by two factors:
GST on rent is applicable to properties rented for commercial purposes. Even if a residential property is rented for commercial purposes, the rental income is liable for tax under GST on rent.
It is important to mention here that GST liability would remain intact as long as you have given your property on rent for business, irrespective of the nature of its usage.
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However, if you have rented your residential property for residential purposes to an individual, GST on rental income would not be applicable.
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Rental income threshold:
Under the GST regime, the need to pay GST on rent arises, when you get an annual rental income of Rs 20 lakhs or more. Earlier, this threshold was kept at Rs 10 lakhs.
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Rate of GST on rent
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In case both the above factors are applicable, you will have to pay 18% of your rental income as GST on rent.
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How to pay GST on rent?
In case GST on rental income is applicable, the landlord will have to register himself and pay tax.
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ITC on GST on rent
In case you meet all the eligibility criteria, you can claim input tax credit on GST on rent.
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Do I have to pay GST on rental income if I have rented a property for residential purposes?
No, if you rent a property for residential purposes, it is exempted from GST.
Is rent considered as a taxable supply of services or goods under GST?
Rent is considered as a taxable supply of services under GST.
What is the GST rate on income from commercial properties?
The GST rate on rent is 18% of the monthly rental income in case the annual income is Rs 20 lakhs or more.
What is the GST rate on rent from commercial properties if income is less than Rs 20 lakh?
GST is not applicable if rental income is less than Rs 20 lakhs in a year.
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