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August 13, 2022

When you have to pay GST on House Rent? Even if you have GST Number as a Tenant, it is not necessary you will be liable to pay GST !!

by CA Shivam Jaiswal in GST

When you have to pay GST on House Rent?

Even if you have GST Number as a Tenant, it is not necessary you will be liable to pay GST !!

Earlier, rent of residential properties till July 17, 2022 was exempted from GST irrespective of whether the tenant or landlord is registered or not.

As per the new rules w.e.f. June 18, 2022, if the tenant of the residential property is GST-registered, the tax will be paid by such tenants under the reverse charge mechanism (RCM).

As per RCM rules if the transaction is for furtherance of business then only GST is applicable, if transaction is for personal use then no GST is applicable.

For example if a business man like content creators or business professionals like CAs, lawyers, etc who are registered in GST use resident place for living with family, then GST is not applicable, as it is for personal use, provided they do not claim rent expenses in ITR!

If in the above case they are claiming rent expenses partially for business purpose as they are operating from resident place for their business, it will be then assumed for furtherance of business and GST will be applicable under the reverse charge mechanism (RCM) .

Following 2 cases GST shall not able applicable on house rent on RCM,

1) If you are Tenant who is not GST registered, then not required to pay GST, eg salaried class

2) If you are Tenants who is GST reg but using resident property for personal use & not for business purpose

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