ONLY TENANTS REGISTERED FOR GST MUST PAY RENT TAX

If you are a salaried individual who has taken a residential apartment on rent/lease, the recently enacted standards for the imposition of goods and services tax (GST) under the reverse charge mechanism (RCM) on rent payments do not apply.

Prior to July 17, the GST did not apply to rent/lease fees for residential properties rented to “any person.” Following In accordance with the 47th GST Council proposal and a notification issued on July 13, residential property that is leased or rented is subject to GST in certain circumstances. When an unregistered person rents his/her apartment to a GST-registered person beginning on July 18, the GST will apply. In addition, under the reverse charge system, the tenant will be responsible for the Goods and Services Tax (currently 18 percent) and compliance duties. The term ‘person’ under tax law encompasses all legal entities, including corporations, and is not limited to individuals. Salaried persons do not require a GST registration. It is also crucial to understand that not every businessperson, professional, or business entity must register. The yearly registration requirement is Rs 20 lakh for service providers and Rs 40 lakh for product suppliers (registration threshold limits are lower in north-eastern states). In many instances, however, even those below the threshold restrictions register for GST since it allows their customers to receive an input tax credit in the supply chain.

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