Key Points on GST for Renting of Properties.

The recent amendment through Notification No. 09/2024 – Central Tax (Rate), dated 8th October 2024, effective from 10th October 2024, expands the scope of GST on commercial property rentals. This change introduces Entry 5AB in Notification No. 13/2017 (Central Tax – Rate), which mandates that GST must be paid under the Reverse Charge Mechanism (RCM) when an unregistered person rents commercial property to a registered person. This shifts the tax liability from the supplier (unregistered person) to the recipient (registered person).
Previously, a similar rule was applied to residential properties through Notification No. 05/2022, which made RCM applicable on residential property rented by any person to a registered person. The exemption for residential property rentals, provided under Notification No. 12/2017, was partially removed for transactions involving registered tenants.
Key Points on GST for Renting of Properties:
This amendment primarily impacts commercial rentals, ensuring that even when an unregistered landlord leases commercial property to a registered tenant, the tenant becomes liable to pay GST under RCM. This aligns with the government’s goal of expanding the tax base and ensuring tax compliance in the real estate sector.This amendment primarily impacts commercial rentals
Renting of residential property by a registered person to a registered person for business use: GST is payable under RCM.