Relax, if you are a salaried individual and have taken a residential flat on rent/lease, the recently introduced norms for levy of goods and services tax (GST) under the reverse charge mechanism (RCM) on rent that is paid will not apply. Up to July 17, GST was not applicable on rent/lease fee if the residential property was rented out to ‘any person’. Following the 47th GST Council recommendations and issue of a notification on July 13, residential property given out on lease or rent attracts GST under certain circumstances.
The new norms stipulate that from July 18, when an ‘unregistered person’ (for example, a salaried individual or small businessperson) gives his/her flat on rent to a GST ‘registered person’ (for example, a company), then GST will apply. Further, under the reverse charge mechanism, it is the tenant who will have to bear the GST (current rate is 18%) and the compliance obligations. The term ‘person’ under tax laws denotes not just an individual, but is wide and includes all legal entities – including corporates.
Salaried individuals do not require a GST registration. It is also important to note that all businesspersons, professionals or business entities are not required to register. The annual threshold limit for registration is a turnover of Rs 20 lakh for service providers (say, a business consultant) and Rs 40 lakh for a supplier of goods (registration threshold limits are lower in northeastern states). However, in many cases, even those below the threshold limits obtain GST registration as it enables their clients/customers to claim input tax credit in the supply chain.
We have recently released the 7th Edition (May, 2022) of our book on Goods and Services Tax, titled, “GST LAW AND COMMENTARY – WITH ANALYSIS AND PROCEDURES”, updated with the Finance Act, 2022 in a set of 4 Volumes. We thank you all for the support and your enduring response.
Have a look at the complete tour of the Book at: https://cutt.ly/nF6O0oN
Order your copy now and be a part of the GST learning excursion in the most comprehensive and lucid form !!
For more details and purchase online at: https://cutt.ly/RFMox8D