Finance Ministry vide Notification No. 12/2017-Central Tax (Rate) issues clarification on taxability of ‘tenancy rights’ under GST, states that such activity against consideration in the form of tenancy premium constitutes a “supply of service” liable to GST. Explains that it is a form of lease or renting of property and such activity is specifically declared to be a service in Para 2 of Schedule II, i.e. any lease, tenancy, easement, license to occupy land is a supply of service. As regards levy of stamp duty and registration charges on transfer of tenancy rights, Ministry states, “Merely because a transaction or a supply involves execution of documents which may require registration and payment of registration fee and stamp duty, would not preclude them from the scope of supply of goods and services and from payment of GST”.
Transfer of tenancy rights cannot be treated as sale of land or building declared as neither a supply of goods nor of services in Schedule III. However, grant of tenancy rights in a residential dwelling for use as residence against tenancy premium or period rent or both, is exempt. On the other hand, services provided by outgoing tenant by way of surrendering tenancy rights against consideration in form of a portion of tenancy premium is also liable to GST.
Read More at: http://www.cbec.gov.in/resources//htdocs-cbec/gst/Circular_No.44.pdf