The application of GST (Goods and Services Tax) on rented properties in India depends largely on whether the property is residential or commercial and the GST registration status of the tenant and landlord. Since GST’s implementation on 1st July 2017, the tax landscape has seen key changes, especially concerning residential property rentals.
Scenario | 1st July 2017 – 17th July 2022 | 18th July 2022 Onwards |
---|---|---|
Both landlord and tenant are registered | GST-exempt | GST @18% payable by tenant (RCM) |
Only tenant is registered | GST-exempt | GST @18% payable by tenant (RCM) |
Tenant is unregistered | GST-exempt | GST-exempt |
Property used for commercial purposes | GST @18% under forward charge | GST @18% under forward charge |
In summary, renting residential properties for residential use to unregistered tenants remains exempt from GST, while registered tenants must account for GST under RCM since July 2022.
For commercial properties, GST regulations differ markedly. Here, the tax applies consistently, though the responsibility for payment depends on the landlord’s registration status.
Scenario | GST Applicability |
---|---|
Landlord is registered | GST @18% under forward charge |
Landlord is unregistered | GST @18% payable by tenant (RCM) from 10th October 2024 |
Property used for commercial purposes | GST @18% always applicable |
The GST rules on renting properties in India are structured to differentiate between the purpose (residential vs. commercial) and the GST registration status of both landlords and tenants. Residential rentals enjoy conditional exemptions when used solely for living purposes and when the tenant is unregistered. Conversely, commercial property rentals are consistently taxable, with the charge mechanism depending on the landlord’s registration status. These regulations emphasize a nuanced approach, balancing GST’s impact based on property type and parties’ compliance status.
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