18% GST on house rent: Do you have to pay the tax?

New Delhi: The rule of GST on home rent has been changed after the 47th GST Council meeting, chaired by the Union Finance Minister Nirmala Sitharaman in June. The changes in the tax system will come into effect from July 18.  Till now, the rule was that residential property owner has to pay the tax if the property is used for commercial reasons like offices and shops. Owing to the change in the tax system, the tax has now to be paid on rent of property for any use.

However, it does not mean everyone who has rented property has to pay the tax. Below here, one can check the details of whether the GST on rent will apply to him/her.

Who will pay GST on rent? 

The GST rate of 18% will only apply to GST-registered tenants. The annual threshold limit for GST registration is the turnover of Rs 20 lakh for services providers and this limit goes up to Rs 40 lakh for goods suppliers. According to this rule, the salaried class people who are mostly not GST registered will not have to pay GST on rent.

Notably, the GST registration becomes necessary when a person carrying out a business or profession and its annual turnover crosses the threshold limit.

For example, if the landlord is not registered under GST but the tenant is registered, then the tenant is liable to pay tax under the new rules. However, the new rule won’t apply if the landlord and the tenant are unregistered under GST.

In another instance, if the landlord is GST registered but the tenant is not, then the GST won’t be charged.