The Centre said renting of residential unit taxable only when it is rented to business entity.
The Centre on Friday cleared the air whether those staying at a rented accommodation needed to pay goods and services tax (GST). The Press Information Bureau issued a detailed clarification on the provisions of GST which is applicable on rented properties.
“Renting of residential unit taxable only when it is rented to business entity. No GST when it is rented to private person for personal use. No GST even if proprietor or partner of firm rents residence for personal use,” the PIB tweeted.
Earlier, Mint had reported that tenants who are registered will have to pay 18 per cent GST on their rent. The new rule came into effect on July 18 following the recommendations by the 47th GST Council meet. The tax will be paid by such tenants under reverse charge mechanism.
However, financial experts had said that if a salaried person took a house on rent, then GST will not be paid on the rent.
Abhishek Jain, KPMG in India Partner Indirect Tax, said the clarification provides relief to GST-registered proprietors or partners in GST-registered firms who take on rent immovable property for their personal use such as renting of a house for family accommodation, PTI reported.
The Goods and Services Tax was introduced in July 2017. It’s collections touched record high of ₹1.68 lakh crore in April this year. in July, the collection rose 28 per cent to touch the second-highest level of ₹1.49 lakh crore.
(With PTI inputs)