18% GST would be imposed from 18th July 2022, on the lease rent furnished for the rental residential dwellings to enrolled individuals beneath GST. The amendment is on the suggestions of the 47th GST council meeting, conducted on 29th June 2022. For learning the revisions for the common man on the basis of the change, the same would be mandatory to know the GST levy on renting residential dwellings.
Latest Update
19th December 2022
- “No GST is payable where the residential dwelling is rented to a registered person if it is rented it in his/her personal capacity for use as his/her own residence and on his own account and not on account of his business.” Read more
GST Legislation Position Before 18th July 2022 on Rent-free Houses
For the GST legislation, every supply would be subjected to be taxed unless circulated as exempt. There were exemptions on the services of renting a residential dwelling which is being used as a residence, at the start of the GST regime. These types of services would get exempted in the pre- GST times also. The word residential dwelling is used as a residence. As per the services of renting of the commercial dwellings or giving the residential dwellings on rent towards the commercial use, liable for the tax before the date 18th July 2022.
The Present Condition of GST on Rent-free Houses
For executing the suggestion of the GST council, the CBIC incurred two amendments in the GST legislation for the same transaction. One would be limited to the former exemption to the unregistered recipient. The other is to represent the RCM on the registered recipient. The RCM would be the special case beneath GST in which the recipient would need to directly deposit the tax to the government rather than furnishing the same to the supplier.
As per the GST paid on the renting of the residential dwelling towards the residential utilisation rely on the status of the recipient of these residential dwellings. If the tenant would enrol then he is obligated to file the GST beneath RCM from 18th July 2022 or GST shall get exempted. The same could be applied when the property would be used for residential purposes. The recipient could claim ITC of the furnished GST beneath RCM as per the conditions.
GST Impact on Business and Companies Due to Rent-free Houses
The same would affect companies and trades, that furnish the guest houses, rent free accommodation and others to their employees. These businesses would be needed to release the GST on the specified services, but they are enabled to avail the ITC of the furnished taxes, as per the conditions.
The same would be seen subsequently if the ITC on these renting can be refused quoting the same as used for the personal consumption of the employees. The uncertainty in the Input tax credit availability, along with the upfront GST payment beneath RCM might be directed to amend the perquisites to the employees. Thus the examination of the rental agreements for the residential dwellings might be needed via a legal view to prevent litigations.
