18% GST on house rent for tenants? Govt clears doubts on new rule

India

oi-Deepika S

New
Delhi,
Aug
12:
Amid
confusion
over
18
per
cent
GST
on
house
rent
for
tenants,
the
government
on
Friday
clarified
that
the
renting
of
a
residential
unit
is
taxable
only
when
it
is
rented
to
a
business
entity.
The
government
also
said
no
goods
and
services
tax
will
be
levied
when
it
is
rented
to
a
private
person
for
personal
use.

A
GST-registered
tenant
is
required
to
pay
Goods
and
Services
Tax
at
a
rate
of
18%
when
renting
a
residential
property,
effective
from
July
18.
Only
tenants
who
are
GST-registered
are
subject
to
the
18%
tax
on
rent
payments.

GST
collection
in
July
at
Rs
1,28,995
cr;
Second
highest
ever

Further,
it
also
said
that
no
GST
is
applicable
when
it
is
rented
to
a
private
person
for
personal
use.

“No
GST
is
applicable
even
if
the
proprietor
or
partner
of
the
firm
rents
residence
for
personal
use,
“the
tweet
said.

Previously,
only
commercial
properties
like
offices
or
retail
spaces
given
on
rent
or
lease
attracted
GST.
There
was
no
GST
on
rent
or
lease
of
residential
properties
by
corporate
houses
or
individuals.

The
new
rules
will
impact
the
companies
and
professionals
who
have
taken
residential
properties
on
rent
or
lease.

The
rent
paid
by
companies
towards
the
housing
properties
taken
on
rent
to
be
used
as
guest
houses
or
residences
for
employees
will
now
attract
18
per
cent
GST.
This
will
increase
the
employees’ costs
for
the
companies
that
are
offering
free
accommodation
to
employees.