GST on Residential rental from July 2022

  • Till June 2022 GST was applicable only on commercial properties on rent 
  • Residential Properties on rent was exempt till June 2022 
  • From July 2022 – The government has made GST applicable on residential properties as well. 
  • GST on residential rental will be applicable only for registered assessee living in residential premises, i.e., Freelancer, Professional, Content Creator, Photographer, Designer or Business Owner registered under GST, etc., 
  • Assessee already registered under GST & taken residential premises on rent, then GST of 18% will be applicable under Reverse Charge Mechanism. 
  • Meaning landlord will not charge the GST, but the assessee will have to deposit it while filing GST returns. Input tax credit can be claimed for it as well, but initially GST has to be paid. 

GST on residential renal: 

The goods and services tax (GST) is in attention these days as to whether a salaried individual should pay GST on home rent. According to tax experts, until 17th July 2022, GST was applicable on the rent of a commercial property but from 18th July 2022, GST shall be charged if such residence is rented or leased by a GST-registered person. As recommended at the 47th GST Council meeting, the tenant should pay 18 per cent GST on a reverse charge basis (RCM). However, they can claim this value as a deduction while they pay tax on sales in GST returns.

On what rule says in regard to GST on rent of residential property, Mahesh Jaising, Partner, Leader – Indirect Tax at Deloitte India said, “Renting of residential dwellings up to 17th July 2022 was exempt regardless of the status of the tenant i.e. whether the service provider or service recipient is registered or unregistered. This meant that renting of property for residential purposes was exempt for all. However, w.e.f. 18th July 2022, a tenant who is registered will become liable to GST on renting for residential purposes under the reverse charge mechanism.”

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