Fact Check: Do you need to pay 18% GST on house rent? Truth inside
New Delhi : GST Council has announced an 18% GST on tenants in the new set of rules and since then people have been wondering if their house rents will go up by 18 per cent. To clear the doubts and confusion related to the recent announcement, we will provide facts-based details in this article.
During the 47th GST council meeting, it has been decided that the rented property will come under the GST regime. The new rule will come into effect from July 18, 2022 onwards.
The PIB has also clarified that the new tax regime will not be applicable on property rented to a private person for non-commercial use. Even if a proprietor or a partner of a firm is renting a property for personal use, no GST will be applicable.
18 per cent GST will be applicable to tenants with registered GST numbers. The annual threshold limit for GST registration is a turnover of Rs 20 lakh for service providers and Rs 40 lakh for goods suppliers.
As per the new rules, a GST-registered tenant will be liable to pay the tax under the reverse charge mechanism (RCM). The tenant can claim the GST paid under Input Tax Credit as a deduction. This tax is only applicable when a tenant is registered under GST and is liable to apply for GST returns. The owner of the property is not liable to pay the GST.
So, all those reports which have claimed that a person living on rent has to pay GST are false. There is no such rule announced by the government.