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Clarification on GST on Commercial property (Renting Income) – What to charge (CGST/SGST or IGST) in case of renting services

By Paras Mehra

( 12.1K Views) August 17, 2017

Clarification on GST on renting of Commercial Property

Introduction

A lot of taxpayers are facing issues over GST on renting of commercial property. To clear all the ambiguity across this issue, we shall explain the concept with practical example.

However, in case after this article, there is still any query left, then you can write to us at info@hubco.in.

GST on renting of Commercial property

Under GST, renting of commercial property is taxable and not exempt under GST. Hence, let us understand what to charge and how to charge with the help of practical example.

#Case No.1: Single Property rental income less than 20 Lakh

A person residing in Delhi have a commercial property in Haryana and getting a rent of Rs.30,000/- per month or say Rs.3,60,000/- yearly.

Solution: As per GST rules, in case of immovable property, the place of supply shall be the address of the immovable property. Therefore, even though the person owning the property is located in Delhi, the place of supply shall always be the place where property is situated.

Further, the supply of services shall also take place where the immovable property is situated. Hence, the following transaction shall takes place:

Taxability: Taxable
Exemption: Yes, since total receipts are less than Rs.20 Lakh.
Place of Supply: Haryana
Registration: Not required

#Case No.2: Single Property rental income is more than 20 Lakh

A person residing in Delhi have a commercial property in Haryana and getting a rent of Rs.3,00,000/- per month/Rs.36,00,000/- yearly.

Solution: As explained above, since the supply is taking place from where the property is situated, location of the owner of the property is irrelevant.

Hence, the following transaction shall takes place:

Taxability: Taxable
Exemption: No, since total receipts are more than Rs.20 lakh
Place of Supply: Haryana
Registration: Required from Haryana on the address where property is situated.
Tax invoice: Yes, invoice needs to be raised each month.
What to charge: CGST and SGST shall be charged since it is the case of local supply.

#Case No.3: Muliple Property having individual rental income less than 20 Lakh.

A person residing in Delhi have a commercial property in Haryana and getting a rent of Rs.125,000/- per month and a commercial property in Noida (UP) at monthly rent of Rs.100,000/-per month.

Solution: This is a special case, where the owner has two properties and individually their rental income is less than basic exemption limit but collectively, it is more than the basic limit.

As per GST law, we need to see the basic exemption limit on Pan India basis and not on individual basis. This is because though we have two properties but these are owned by a single person and exemption is checked on single PAN basis.

Hence, the following transaction shall takes place:

Taxability: Taxable
Exemption: No, since total receipts are more than Rs.20 lakh
Place of Supply: Haryana
Registration: Required from Haryana and Uttar Pradesh
Tax invoice: Yes, invoice needs to be raised each month.
What to charge: CGST and SGST shall be charged since it is the case of local supply.