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18% GST on Renting of Dwelling for Commercial Purpose: AAR [Read Order]

renting - dwelling - GST - AAR - Taxscan

The Andhra Pradesh Authority of Advance Ruling (AAR) ruled that 18% of GST is applicable on renting of dwelling for commercial purposes, as it is covered under ‘Rental or leasing services involving own or leased non-residential property”.

The applicant, M/s Lakshmi Tulasi Quality fuel is engaged in the business of running, managing, and operating the day to day affairs of the residential premises and sub-lease of such residential premises to individuals for the purpose of long-stay accommodation.

The applicant has sought advance ruling on the issue whether the applicant is eligible for the exemption from payment of GST on the monthly rentals received by her on the lease of her residential building at to D-Twelve Spaces Private Limited, as per Sl.No. 13 of the Notification No.9/2017 dated June 28, 2017.

The Authority consisting of members D. Ramesh and M. Shreekanth ruled that 18% of GST is applicable on renting of dwelling for commercial purposes, as it is covered under ‘Rental or leasing services involving own or leased non-residential property”.

“The entry No.13 of Notification No.9/2017 (Integrated Tax) (Rate) dated June 28, 2017 “services by way of renting of residential dwelling for use as a residence” is not applicable to the present case on hand,” the AAR said.

“Though the applicant claims that she has rented out a residential dwelling for use as a residence, it appears that the premise is a non-residential property. Considering the number of rooms and amenities provided in it, boarding and hospitality services extended to the inmates, and all the clauses of the agreements discussed- above, it appears that the building was constructed for the purpose of running a lodging house. It is clear that the lessee is engaged in the commercial activity of renting rooms in the dwelling and providing boarding and hospitality services to the inmates,” the AAR observed.

To Read the full text of the Order CLICK HERE
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