Goods and services tax (GST) will not have to be paid in case the owner of a GST-registered company rents an accommodation in his personal capacity, the Central Board of Indirect Taxes and Customs (CBIC) said in a notification issued on December 30, 2022. The new rule kicks in from January 1, 2023. The announcement by the CBIC is based according to the recommendations of the GST Council in its 48th meeting on December 17, 2022.
Under the GST framework, renting of the property by the landlord and renting the property by a tenant are both viewed as an extension of service, in specific circumstances, and attract GST on rent.
“The exemption will cover “services by way of renting of a residential dwelling to a registered person where – (i) the registered person is proprietor of a proprietorship concern and rents the residential dwelling in his personal capacity for use as his own residence; and (ii) such renting is on his own account and not that of the proprietorship concern,” the CBITC notification said.
In its 48th meeting on December 17, 2022, the GST council had recommended that no tax was payable where a house was rented to a registered person in his personal capacity for use as his residence and on his own account and not on account of his business.
If the same unit is used by a business proprietor to run his business, he would be liable to pay 18% GST on rent under the reverse charge mechanism, it was recommended.
“This is a fair notification that would maintain a tax-neutral status for renting residential accommodation to proprietors of the proprietary concern for residential use only,” AMRG & Associates senior partner Rajat Mohan told PTI.
An alumna of the Indian Institute of Mass Communication, Dhenkanal, Sunita Mishra brings over 16 years of expertise to the fields of legal matters, financial insights, and property market trends. Recognised for her ability to elucidate complex topics, her articles serve as a go-to resource for home buyers navigating intricate subjects. Through her extensive career, she has been associated with esteemed organisations like the Financial Express, Hindustan Times, Network18, All India Radio, and Business Standard.
In addition to her professional accomplishments, Sunita holds an MA degree in Sanskrit, with a specialisation in Indian Philosophy, from Delhi University. Outside of her work schedule, she likes to unwind by practising Yoga, and pursues her passion for travel.
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