According to the new GST rules, 18% tax will have to be paid on the residential property i.e. house rent. This rule has come into effect on 18 July. This tax will be charged under the reverse charge system i.e. GST will have to be paid by the tenant. According to Exerts, letting out of an immovable property is considered a service under the GST Act. In such a situation, GST is levied on it.
The imposition of GST on rent will have an impact on a large number of people. Real estate expert Ashutosh Srivastava said, "Those providing co-living facilities will be shocked by this. The amendment in the GST law aims to levy tax on firms providing accommodation on rent. But looking at the draft of the law, it seems that it will also hit many such GST payers who have taken houses on rent.
The new tax will apply to only those tenants who are registered in GST. GST will not be charged to every employee living in a rented house. Tax expert Archit Gupta said if you work from a rented house. Also, if you do not take tax exemption on the income tax return by showing the rent as a business expense, then GST will not be applicable.
If a person who is not registered in GST gives his house for rent to a person who is not registered in GST, then the tenant will have to pay 18% GST under the reverse charge regime. Till now, GST was applicable on rent of Dhar only if it was used for non-residential purposes like office, shop, or godown. But now you will have to pay tax on renting the house for any kind of use.
If the company takes a flat on rent for its employees then the company will have to pay GST on the rent, as in this case, the tenant is the company.
Pay GST like this: The tenant has to file the GST return and pay whatever tax is generated. You will get the benefit of an input tax credit.