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Rental tax pay land lord or tenant gst applicable

Question BankCategory: Goods & Service Tax (GST)Rental tax pay land lord or tenant gst applicable
Kollipara sundaraiah asked 1 month ago

A Doctor owns commercial property maintained a private hospital up to 31-03-24 gst non registered after dt:01-04-24 from hospital rent to another doctor rs:10 lacs rent per month.
Question:
Rental income land lord gst registered compulsory 
2.gst tax payment for landlord or tenant and RCM or fcm applicable in gst act.

1 Answers
Manish answered 1 month ago

The query is about the applicability of GST (Goods and Services Tax) on rental income when a doctor owns a commercial property and rents it to another doctor. Here’s a breakdown of the two parts of the question based on the details provided:
1. Is GST Registration Compulsory for the Landlord?

  • As per GST laws in India, if a person has an annual turnover exceeding the threshold limit, they are required to register for GST.
    • For services (including rental income), the GST registration threshold is ₹20 lakhs (or ₹10 lakhs in special category states) in a financial year.
    • In this case, the rental income is ₹10 lakhs per month, which totals ₹1.2 crores annually, well above the threshold limit.
    • Conclusion: The doctor (landlord) is required to compulsorily register for GST as their rental income exceeds the threshold of ₹20 lakhs per annum.

2. GST Tax Payment and Reverse Charge Mechanism (RCM) or Forward Charge Mechanism (FCM) Applicability

  • What is Forward Charge Mechanism (FCM): In the forward charge mechanism, the supplier is liable to collect and pay GST.
  • What is Reverse Charge Mechanism (RCM): In RCM, the recipient of the service is liable to pay GST instead of the supplier.
  • In the case of renting immovable property for commercial purposes (such as renting a commercial building to another doctor for private hospital purposes), the forward charge mechanism (FCM) is applicable.
    • Therefore, the landlord (doctor who owns the property) will charge GST on the rental income and is responsible for depositing it to the government.
    • The tenant (other doctor renting the property) can claim Input Tax Credit (ITC) on the GST paid, if they are GST registered.

GST Rate on Commercial Rent: The current GST rate on commercial property rental is 18%.
Hence

  • The landlord must charge 18% GST on the monthly rental income of ₹10 lakhs (i.e., ₹1.8 lakhs of GST per month).
  • This will be under the Forward Charge Mechanism (FCM), where the landlord collects and pays GST.
  • SAC Code 997212:

    • Description: “Rental or leasing services involving own or leased non-residential property.”
    • GST Rate: 18% (as applicable for commercial rental services).

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