No GST On Residential Premises If Rented Out For Personal Use, Govt Clarifies

The Centre said that the Goods and Services Tax will not be applicable on residential units if they are rented out to private persons for personal use

The government on Friday dismissed media reports claiming there is an 18 per cent GST on house rent paid by tenants.

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The central government on Friday said that the Goods and Services Tax (GST) will not be applicable on residential units if they are rented out to private persons for personal use, according to a tweet by the PIB.

Hence, the government dismissed media reports claiming there is an 18 per cent GST on house rent paid by tenants.

In a tweet, the government said the GST would be levied only when the residential unit is rented out to a business entity.

Claim: 18% GST on house rent for tenants #PibFactCheck

▶️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 pic.twitter.com/3ncVSjkKxP

— PIB Fact Check (@PIBFactCheck) August 12, 2022

"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," it said.

Abhishek Jain, partner Indirect Tax, KPMG in India, 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.

Only commercial properties such as offices or retail spaces given on rent or lease attract the GST. There was no GST on rent or lease of residential properties by corporate houses or individuals.

"If any common salaried person has taken a residential house or flat on rent or lease, they do not have to pay GST. However, a GST-registered person who carries out business or profession must incur 18 per cent GST on such rent paid to the owner," explained Archit Gupta, founder and CEO at ClearTax, as reported by Mint.

The 47th GST Council meeting in June decided to accept the group of ministers’ interim reports on the correction of duty inversion and exemption. Pre-packaged and pre-labelled retail packs, including curd, lassi and butter milk, were brought under GST, effective July 18.