MUMBAI: The Rajasthan bench of the Authority for Advance Rulings has held that GST (Goods and Services Tax) is applicable on the rent if a residential property is used for commercial objective by a lessee (who’s registered for GST purposes).
In the case of Deepak Jain (the applicant) who had leased out his property to a non-public restricted firm, which was engaged in back-office operations, the AAR noticed that, as much as July 17, 2022, renting of residential dwellings for use as a residence was exempt from GST, whereas renting for commercial use was taxable at 18%.
However, from July 18, 2022, the taxability of renting residential property underwent sure modifications and providers by means of renting of residential dwelling used as a residence is taxable beneath the reverse cost mechanism, if rented to a registered particular person.
In this case, the lease deed issued by the Jaipur Development Authority stipulated that the land use of the property is residential. However, the lease settlement entered into by Jain and the personal firm stipulated that the property can be used solely for commercial use. According to the AAR regardless of potential classification as residential by native authorities, the predominant commercial use turns into the figuring out issue for GST levy.
Renting for commercial use is taxable at 18% and the applicant should pay GST on ahead cost foundation.
Responding to the particular questions on which the advance ruling was sought the AAR held that the premises won’t be coated within the definition of a residential dwelling, beneath the notification dated July 13, 2022, as a consequence of its commercial use. Further, the use and size of keep by the customers decide the character of the property.
In the case of Deepak Jain (the applicant) who had leased out his property to a non-public restricted firm, which was engaged in back-office operations, the AAR noticed that, as much as July 17, 2022, renting of residential dwellings for use as a residence was exempt from GST, whereas renting for commercial use was taxable at 18%.
However, from July 18, 2022, the taxability of renting residential property underwent sure modifications and providers by means of renting of residential dwelling used as a residence is taxable beneath the reverse cost mechanism, if rented to a registered particular person.
In this case, the lease deed issued by the Jaipur Development Authority stipulated that the land use of the property is residential. However, the lease settlement entered into by Jain and the personal firm stipulated that the property can be used solely for commercial use. According to the AAR regardless of potential classification as residential by native authorities, the predominant commercial use turns into the figuring out issue for GST levy.
Renting for commercial use is taxable at 18% and the applicant should pay GST on ahead cost foundation.
Responding to the particular questions on which the advance ruling was sought the AAR held that the premises won’t be coated within the definition of a residential dwelling, beneath the notification dated July 13, 2022, as a consequence of its commercial use. Further, the use and size of keep by the customers decide the character of the property.
