18 percent GST on rent : The 47th GST Council meeting held in June under the leadership of Union Finance Minister Nirmala Sitharaman approved several key changes. These came into effect from July 18. One of them is that tenants have to pay 18 percent GST on rent. Until now, GST was payable only if residential complexes were used for commercial purposes like offices and shops. But, now you have to pay tax even if you rent for any purpose. And does everyone who rents have to pay GST? Let's see..
☛ Not everyone who rents is required to pay GST.
☛ Only GST registered tenants have to pay tax. However, the tax paid can be claimed as deduction under 'Input Tax Credit (ITC)' in the GST returns.
☛ Wage earners are not required to pay GST on rent.
☛ Tax is collected from GST registered persons through 'reverse charge mechanism'. This means that the liability to pay the tax is on the person receiving the services. This means that the owners who rent houses here do not have to pay any tax. That responsibility rests with the tenants.
☛ If the owner is registered in GST.. If the tenant is also registered.. the tenant has to pay the tax.
☛ If both the owner and the tenant are not registered in GST.. there is no need to pay tax.
☛ Even if both of them don't have GST registration, they don't want to pay tax.
☛ Service providers with an annual turnover of Rs.20 lakh and above and traders with an annual turnover of Rs.40 lakh will have to pay 18 percent GST on the rent they pay.