The government is constantly amending GST provisions related to renting immovable property, whether commercial or residential, to bring renting immovable property under the GST purview in every aspect. As per the recommendation of the GST Council in the 54th GST Council meeting, the CBIC has now imposed GST on renting commercial property by unregistered persons to registered persons through RCM.
This article discusses the journey of the taxability of renting immovable property so far and the latest amendment in provisions:
1. Taxability on renting of immovable property so far:
- Original Provisions:
- Renting commercial property by a registered person to a registered/ unregistered person is liable to GST under Forward Charge.
- Renting a residential dwelling for use as residence is exempted through entry No. 13 of Notification No. 09/2017-Intergrated Tax (Rate).
- Renting commercial property by an unregistered person to a registered/ unregistered person was not liable to GST.
- Amendment with effect from 18th July, 2022:
- With effect from 18th July 2022, renting residential dwellings to registered persons by any person was brought under GST through a Reverse charge mechanism through Notification No. 05/2022-Integrated Tax (Rate) dated 13-07-2022.
- Therefore, renting residential dwellings, whether by registered persons or unregistered persons, to registered persons was brought under GST through RCM.
- Amendment with effect from 10th October, 2024:
- Now the government has brought the renting of commercial property by unregistered persons to registered persons under GST purview through RCM.
- With effect from 10th October 2024, as per the recommendation of the GST Council in the 54th GST Council meeting, the renting of commercial property by any unregistered person to any registered person is liable to GST under RCM through Notification No. 09/2024 – Integrated Tax (Rate) dated 8th October 2024.
2. Scenarios of taxability of Renting of Immovable Property
Following are the possible scenarios of renting immovable property and their corresponding taxability:
2.1 Renting of Residential Property:
| Service Provider | Service Recipient | Use of Property | Taxability | Reference |
| Registered Person | Registered Person | Residential/ Commercial Purpose | Taxable under RCM | Entry No. 6AA of RCM Notification notified through Notification No. 05/2022- Integrated Tax (Rate) dated 13-07-2022 |
| Unregistered Person | Registered Person | Residential/ Commercial Purpose | Taxable under RCM | Entry No. 6AA of RCM Notification notified through Notification No. 05/2022- Integrated Tax (Rate) dated 13-07-2022 |
| Registered Person | Unregistered Person | Residential Purpose | Exempted | Entry No. 13 of Notification No. 09/2017-IGST dated 28.06.2027 |
| Registered Person | Unregistered Person | Commercial Purpose | Taxable under Forward Charge | No exemption is available |
| Unregistered Person | Unregistered Person | Residential/ Commercial Purpose | Exempted | Entry No. 13 of Notification No. 09/2017-IGST dated 28.06.2027 |
2.2 Renting of Commercial Property:
| Service Provider | Service Recipient | Taxability | Reference |
| Registered Person | Registered Person | Taxable under Forward Charge | No Exemption is available |
| Unregistered Person | Registered Person | Taxable under RCM | Entry No. 6AB of RCM Notification notified through Notification No. 09/2024-Integrated Tax (Rate) dated 08-10-2024 |
| Registered Person | Unregistered Person | Taxable under Forward Charge | No Exemption is available |
| Unregistered Person | Unregistered Person | No GST is applicable | Not covered under Reverse Charge Mechanism. |
Conclusion
With the inflation in the values of immovable property, the corresponding rent amount has also increased substantially. The Government intends to charge GST on all the renting of immovable property. With the latest notification, renting of immovable property has come under GST purview either through forward charge or through Reverse Charge. The exemption is solely provided in case of renting of residential property to an unregistered person for residence purposes.
