As per the decision of the 48th GST Council meeting headed by the Finance Minister Nirmala Sitharaman, the Central Board of Indirect Taxes and Customs ( CBIC ) has notified that the GST is not payable on the properties rented out by the proprietors in their personal capacity under the GST Acts.
The last GST Council meeting held at New Delhi via video conference recommended that GST is not payable where the residential dwelling is rented to a registered person if it is rented it in his/her personal capacity for use as his/her own residence and on his own account and not on account of his business.
A notification issued on Friday stated that “For the purpose of exemption under this entry, this entry shall cover services by way of renting of residential dwelling to a registered person where, – (i) the registered person is proprietor of a proprietorship concern and rents the residential dwelling in his personal capacity for use as his own residence; and (ii) such renting is on his own account and not that of the proprietorship concern.”
The above GST exemption is applicable from 1st January 2023.
The 47th GST Council meeting presided over by Union Finance Minister Nirmala Sitharaman in June, approved a slew of changes to the taxing scheme including levy of 18% GST on the registered tenant. As per the modified law, the tenant must pay Goods and Services Tax at the rate of 18% when renting a residential property.
This has led to so much confusion following which, the Government clarified that no GST applicable even if proprietor or Partner of Firm rents residents for personal use.
As per the new rule, a tenant, who is registered under the GST, is required to pay Goods and Services Tax at 18 per cent for renting a property, effective from July 18. The 18 per cent tax on rent paid is only applicable to tenants registered under the GST, meaning a GST-registered person who carries out business or profession will incur 18 per cent GST on such rent paid to the owner.
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