GST ON RENTAL PROPERTY

This query is : Resolved

GAUTAM BANKA (Querist)
Follow

20 August 2017 I have a Commercial Property in U.P and i am receiving rent from that property.My place of business is Bihar.I have taken GST no. in Bihar. How to I collect the rent from property in U.P ?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
Follow

20 August 2017 Issue tax invoice for rent and collect igst.

GAUTAM BANKA

GAUTAM BANKA (Querist)
Follow

20 August 2017 Do I need to have a GST no. in UP as well ?

Upgrade to CAclubindia Pro. Subscribe Now!

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
Follow

27 July 2024 For the rental of commercial property under GST, the rules for GST registration and compliance are outlined clearly. Here’s how you should approach the situation based on the information provided:

### **1. **GST on Rental Income**

**A. **Commercial Property Rental:**

- **GST Rate:** Rental of commercial properties is subject to 18% GST.
- **ITC Availability:** If you are renting out commercial property, you can claim ITC on GST paid on inputs and input services used for providing such rental services.

### **2. **GST Registration and Collection**

**A. **Place of Supply:**

- **Place of Supply for Rental Services:** The place of supply for renting of commercial property is where the property is located. Therefore, in your case, since the property is in Uttar Pradesh (U.P.), the place of supply is U.P.

**B. **GST Registration Requirements:**

- **Single Registration for Multiple Locations:** If you are already registered in Bihar, and you are providing taxable services such as rental of commercial property located in U.P., you are required to:
- **Continue using your Bihar GST registration** to collect and pay GST on rental income, provided you do not exceed the threshold limit of Rs. 20 lakhs (Rs. 10 lakhs in special category states) in turnover for renting of commercial properties in U.P.
- **Compliance:** You need to comply with GST provisions as per your primary registration, which is in Bihar.

**C. **Should You Get Registered in U.P.?**

- **Threshold Limit:** If your aggregate turnover from rental income in U.P. (combined with other states) exceeds Rs. 20 lakhs (Rs. 10 lakhs for special category states), you must obtain a GST registration in U.P.
- **If Below Threshold:** If your turnover is below the threshold limit, you can continue to use your Bihar GST registration but ensure you are correctly reporting and paying GST on rental income received from U.P. property.

### **3. **Collecting Rent and Issuing Invoices**

**A. **Invoice Issuance:**

- **Invoice Requirements:** Issue GST-compliant invoices for the rent collected. The invoice should mention:
- GSTIN of the supplier (you).
- GSTIN of the recipient if available.
- Description of the property.
- GST rate and amount.

**B. **GST Collection and Payment:**

- **Collection:** Collect 18% GST on the rental income from the lessee (tenant).
- **Payment:** Deposit the collected GST into the government treasury as part of your GST returns.

### **4. **Filing GST Returns**

**A. **GSTR-1:**

- **Report Rental Income:** Report the rental income received from U.P. property in your GSTR-1 return.

**B. **GSTR-3B:**

- **Pay GST:** Pay the GST collected on rental income through GSTR-3B and ensure accurate reporting in the return.

### **Summary**

1. **GST on Rental:** Rental of commercial properties attracts 18% GST.
2. **Registration:** If your total rental income across states is below the threshold limit, you can use your Bihar GST registration. If the income exceeds the limit, you need to get a GST registration in U.P.
3. **Invoice and Compliance:** Issue GST-compliant invoices, collect GST on rent, and file your returns accordingly.

### **References**

- **Section 15 of the CGST Act, 2017:** Pertains to the place of supply of services.
- **Notification No. 12/2017-Central Tax (Rate):** Details the GST rates applicable to various services, including rental services.
- **Rule 4 of the CGST Rules, 2017:** Pertains to the requirement of obtaining GST registration.

For precise advice and compliance, particularly if your turnover may be close to the threshold limit or if you have other complex issues, consulting with a GST professional or tax advisor is recommended.