GST Exemption to Renting Service provided by Person other than Government

GST Exemption to Renting Service provided by Person other than Government i.e GST is not paid on following renting services

GST On Renting

In GST, GST rate of 18% is applicable on rent and almost every type of rental income has to be patched in GST.
Every person who charged the GST on an invoice of rent is required to pay the same to the government on or before the 20th day of next month.

For example: Mr. Ram rented a property in Delhi for Rs.1,00,000/- per month to M/s AHG private limited company and invoice of Rs.1,18,000/- is raised by Mr. Ram as on 05-Jun-2020 which includes the GST of Rs.18000/- on the rent for the month of Jun 2020, but M/s AHG private limited pays the rent as on 03-Jul-2020 for the month of Jun-2020. Now the question arises

1. What is the due date for Mr. Ram to pay the GST for the month of Jun-2020 to the government?

Ans. As per the provision of GST, GST is required to be paid on or before the 20th day of next month, in this example due date of deposit of Tax is 20th Jul 2020, now Mr. ram has to pay to government GST of Rs.18,000/- on or before 20th Jul 2020.

2. Is GST also payable in case GST amount not collected by the Mr. Ram from M/s AHG Private Limited on or before due date of payment of GST to government

Ans. Yes, Mr. Ram has to pay the GST to the government, GST amount as mentioned in the invoice whether the same has been recovered or not from the recipient.

Applicability of Tax in case of Rent before GST launched

If the rental income from all the properties of the landlord crosses the basic limit of 10 lakhs per annum, then he has to get service tax registration. If your rental income from all properties in India does not cross Rs. 10 lakh, then you are out of the purview of service tax. If any person applied for service tax registration but the limit of Rs.10 lakh was not crossed in previous year then he was not required to charge the GST on rental income till the total rental income crosses the amount of Rs.10 Lakh in current year even if he gets himself registered under services tax.

Applicability of GST in case of Rent after GST launched

In GST, there is two limit for registration

1. Rs.10 Lakh à Applicable to special category states
2. Rs.20 Lakh à Applicable to other states

After, applicability of GST, a person who registered himself under GST is required to charge the GST on invoice even if the limit of Rs.10/20 Lakh did not exceed in the current financial year.

What are the special category states in GST for which limit of Rs.10lakh is applicable?

Following are special category states for GST registration;

(a) Manipur

(b) Mizoram

(c) Nagaland

(d) Tripura

In GST, almost every supplier of rent is required to charge the GST on the invoice of rent But there are some situations where the supplier of service of Rent is not required to charge the GST amount on the invoice of rent and pay the same to the government. Now we are going to discuss these situations

Exemption to Renting Service Provided by Person other than Government

1. Amount of service is below the exemption limit. That is the value of taxable supply of service is below Rs.10/20 Lakh as the case may be. It means every person whose total amount did not exceed the mentioned amount is not required to register himself under the GST and pay the GST amount.

2. Services by way of renting of residential dwelling for use as residence. It means service of renting which is used for the purpose of residential purpose is exempt from tax.

If any person supplies the both type of service that is for residential as well as commercial purpose then he is required to charge the GST only on the rent which is used for commercial purpose.

For example: Mr. Ram rented two property, one to Mr. Shyam for residential purpose for Rs.8,000/- per month, one to M/s AHG Private Limited for Rs.30,000/- per month.

In this example, Mr. Ram is required to charge the GST @18% on the invoice made on the M/s AHG Private Limited but GST is not charged on the invoice made on the Mr. Shyam.

3. Services by a person by way of renting of precincts of a religious place meant for general public, owned or managed by an entity registered as a charitable or religious trust under section 12AA of the Income-tax Act, 1961 (hereinafter referred to as the Income-tax Act) or a trust or an institution  registered under  sub  clause  (v)  of  clause  (23C) of section 10 of the Income-tax Act or a body or an authority covered under clause (23BBA) of section 10 of the said Income-tax Act:

Provided that nothing contained in this entry shall apply to,-

(i) renting of rooms where charges are one thousand rupees or more per day;

(ii) renting of premises, community halls, kalyanmandapam or open area, and the like where charges are ten thousand rupees or more per day;

(iii) renting of shops or other spaces for business or commerce where charges are ten thousand rupees or more per month.

4.  Services by a hotel, inn, guest house, club or campsite, by whatever name called, for residential or lodging purposes, having value of supply of a unit of accommodation below or equal to one thousand rupees per day or equivalent.

If hotel has two type of Room rent of one type of room is Rs.900 and Rs.1500 for other type of room, then hotel has to charge the GST on the invoice made of Rs.1500/- only and not on the invoice of Rs.900/-

Example: Mr. ABC has one hotel and rent a room(no.101) to Mr. Sagar for Rs.999 and one room(no.130) to Mr. Rohit, is gst applicable in the above case.

Ans. Now, in this example Mr. ABC is required to charge the GST on Room (No.130) that is whose value of service is exceeding Rs.1000/- @ 18% which comes to Rs.180/- and did not required to charge the GST on room(no.101) whose value of supply of service is Rs.999/- only that is less than Rs.1000/-