Renting Guest House from Residential Bring GST Under RCM: Odisha AAR

Under Reverse Charge Mechanism (RCM), the Odisha Authority of Advance Ruling (AAR) held that GST should be levied on renting the residential premises on rent as a guest house.

Case Fact

• As a guest house, the petitioner has given the premises on rent in New Delhi, Odisha, and Jajpur.
• For the employees who visit their offices, the petitioner furnishes them with food and accommodation.
• The owner is enrolled with one of the apartments while the other owner does not get enrolled.
• The owner uses the houses for the purpose of rent, he furnishes the service of rent for both houses to guests.

Petitioner Opinion

• In the Goods and Services Taxes (GST) or the former service tax act, the term residential dwelling does not get described.
• But the education guide of the department elaborated on the phrase residential dwelling on 20th June 2012 as any residential accommodation which does not comprise a hotel, inn, motel, guest house, camp-site, houseboat, lodge, or other places for a temporary stay.

An advance ruling has been filed by the petitioner on whether the rented residences would be utilised as a guest house through the registered person who comes within the GST beneath the Forward Charge Mechanism (FCM) or RCM.

The AAR Ruled

• The kind of rented properties seems to be the residential properties that have been utilised for commercial purposes.
• GST shall be subject to be levied from 18th July 2022 for the residential property that has been given on rent to the registered individual.
• Under Reverse Charge Mechanism (RCM) the liability to file the 18% GST shall be on the tenant when he would be the registered individual under GST.
• The nature, purpose, and kind of the residential dwelling do not secure a condition in the RCM notification.
• Thus a GST shall get imposed on renting a residential dwelling to the registered individual beneath RCM, irrespective of its nature of utilization.