Finally, India has switched to the new indirect tax regime which promises “One Nation, One Tax, One Market” to the whole country.
The GST Council has broadly approved the GST rates for goods at nil rate, 5%, 12%, 18% and 28% to be levied on certain goods. The most essential goods and services attract nil rate of GST under Exempted Categories. Luxury goods and services and certain specific goods and services attract additional cess than 28% GST.
The taxability of rental income under the new indirect tax law was a hot topic since last few years.
The Government, in the past, had made an attempt to bring the income from renting residential property under the ambit of service tax. Subsequently, the same had been withdrawn by sustaining service tax on rental income from a commercial property. Presently, service tax of 15% has to be paid on commercial property rental income.
The levy of service tax on rented immovable property had been held as unconstitutional by Delhi, Punjab and Haryana, Orissa and Allahabad High Courts. The issue is now pending before the Apex Court for final decision.
With regard to rental income, earlier, there were assumptions that leasing of land, renting of buildings as well as EMIs paid for purchase of under-construction houses will attract the Goods and Services Tax from July 1st onwards. However, later, The 14th Meeting of the GST Council held at Srinagar on May 19th had specifically exempted “Services by way of renting of residential dwelling for use as residence” from the tax net.
As per the rates for services notified by the Central Government as approved by the GST Council specifically exempts services by way of renting of residential dwelling for use as a residence. However, it does not exempt renting of immovable property for commercial use. Accordingly, the same is taxable at 18% GST.
The Central Board of Excise and Customs (CBEC) in a recently published FAQ, dealt with a question that “whether rental income up to 20 lakhs would attract GST?”. It was clarified that “GST is leviable only if aggregate turnover is more than 20 lakhs. (Rs. 10 Lakhs in 11 Special category States). For computing aggregate supplies, turnover of al supplies made by you would be added.”
As per GST Law, no GST is payable on Services by a person by way of renting of precincts of a religious place meant for general public. So the rate of GST payable on Services by a person by way of renting of precincts of a religious place meant for general public is nil rate.
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 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 Income-tax Act:
However, the exemption shall not be applicable to renting of rooms where charges are Rs 1000/- or more per day, renting of premises, community halls, kalyanmandapam or open area, etc where charges are Rs. 10,000/- or more per day, and renting of shops or other spaces for business or commerce where charges are Rs 10,000/-or more per month.
