As per the 47th GST Council Meeting, new GST rates are in place and now customers have to shell out more money on goods, and renting apartments is going to get costlier for companies.
Renting an immovable property is considered a supply of service and it will attract GST @ 18% (SAC Code – 9963/9972) w.e.f 18th July 2022. GST was not applicable/exempted if the residential property was rented out to any person (whether a registered or unregistered person under GST) up to 17th July 2022.
It is going to impact individuals who have taken residential property on rent in the name of business. If a residential property is rented out to a person registered under GST (if he is paying GST), then the liability to pay GST @ 18% under the reverse charge mechanism will arise on the tenant. However, GST will not be applicable if the residential property is rented out to an unregistered person under GST w.e.f. 18th July 2022.
Scenario 1 – When a company, LLP, Firm, AOP, BOI, etc takes a residential dwelling for the purpose of residence on rent for employees it will be considered as an item of business expenditure. GST will be paid under RCM and the ITC (input tax credit) of the GST paid under reverse charge can be claimed.
Scenario 2 – When an individual who is registered under GST as a proprietorship concern takes a residential dwelling for the purpose of residence on rent for himself/herself/family then it will be considered as an item of ‘personal expenditure’ and not the business expenditure of a proprietorship concern. GST will be paid under RCM but the ITC (input tax credit) of the GST paid under reverse charge cannot be claimed as it is blocked per section 17(1).
It is therefore advisable for individuals to not take residential property on rent in the name of the business (proprietorship concern) to avoid GST liability. 🤷♂️
Here’s what all will get costly:
- 5 per cent GST on pre-packed, labelled food items like atta, paneer, and curd
- 12 per cent GST on hotel rooms with the tariff of up to Rs 1,000/day, maps and charts
- 5 per cent GST on hospital rooms, except ICU, with rent above Rs 5,000
- 18 per cent GST on tetra packs, and cheques — lose or in book form
- 18 per cent on LED lamps, ink, knives, blades, pencil sharpener, blades, spoons, forks, ladles, skimmers, skimmers, cake servers; printing, writing and drawing ink; fixture and their metal printed circuits board
- 12 per cent GST on solar water heater instead of the previous 5 per cent
- Works contract for roads, bridges, railways, metro, effluent treatment plant, crematorium and others by 18 per cent
- 18 per cent GST on RBI, Irda, and Sebi services and renting of a residential dwelling to business entities
- 12 per cent GST on bio-medical waste treatment facilities
Here’s what all will get cheaper:
- 5 per cent GST on ostomy appliances and on the transport of goods and passengers by ropeways from the previous 12 per cent
- 12 per cent tax against the previous 18 per cent for renting trucks, goods carriage where the cost of fuel is included
- GST exemption on air travel to and from north-eastern states and Bagdogra restricted to economy class only
- 5 per cent GST on electric vehicles, whether or not fitted with a battery pack