Impact of GST on property rented for commercial purposes

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Rent payment is one of the most famous expenses in any industry. GST (Goods and Services Tax) is charged on rent in many cases. This article gives all the information about the impact of GST on property rented for commercial purposes and other details.

Impact of GST on rental fee

The implementation of GST (Goods and Services Tax) has chalked out a structured approach to gather taxes from many sectors. Rent has been the income source for many years.

What was the condition in the Pre Goods and Services Tax?

Pre Goods and Services Tax, the landlord had to acquire a service tax registration if his complete tax services exceed rupees 10 lakh. Under the past commercial properties alone, the tax regime that was letting out will engage service tax. Moreover, this applies if the residential possessions are utilizing for commercial purposes. Service tax was levied at fifteen percent of the rent for commercial purposes.

What is the impact of Goods and Services Tax on rent?

When persons rent out a residential property for residential purposes, it is exempted from GST. Any lease and renting out of the immovable property for the company will engage GST at eighteen percent because it will be treated as the supply of a service. After GST was executed, the threshold boundary for applicability of GST has been extended from Rs 10 lakh to Rupees twenty lakh.

Who is needed to register in borrowing industries?

A taxpayer earning more than the exempted threshold would have to GST Registration or pay tax. Hence, if a person has provided their property to the industry, then it is chargeable. If they receive more than Rs twenty lakh from the similar, they would have to apply for a GST Return Filing.

How is GST calculated?

  • For the commercial places that are on rental, GST would be relevant at 18 percent.
  • If the registered charitable trust and spiritual belief own and handle a spiritual position meant for the community, it is exempt from GST.

What are ITC supplies during GST charging on rent?

The individual paying GST on rent may generally take credit for the levy paid to pay his other tax dues. Additionally, if all the supplies to assert input tax credit are completed, ITC on GST spent on rent may be claimed.

What is the stipulation for a tax deduction on profits tax?

The property’s owner has to gather the GST from the individual paying rent. This GST would be on rental fee charge. The rent’s payer has to deduct profits tax at source at ten percent if rent exceeds Rs 2.40 lakh yearly for the property. It is important to note that GST on the rent charged for an immovable property by the authority to a registered individual. But, when the property is rented to a person who is not registered, the administration will themselves deduct GST.

It can conclude that there is a significant impact of GST on property rented for commercial purposes. So people can file their GST registration application online and get tremendous benefits.

New functionalities to be deployed on GST Portal from July, 2021

If you want any other guidance related to GST Registration or GST Return filing, please feel free to talk to our business advisors at 8881-069-069.

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