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GST on Rent

Abhinandan (student) (139 Points)

04 October 2017

Do we have to allocate the rent paid , once for a month in number of days and check whether it crosses the limit of 5000 per day under sec 9(4) and then pay on RCM ?

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22 Replies

Sujit Saha (243 Points)
Replied 04 October 2017

It seems to be a Commercial rental expenses. It depends on the rent deed. Generally it Calculate per month. However, nothing to worry about. If you are paying gst th rcm, you can claim the same as itc

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Abhinandan (student) (139 Points)
Replied 04 October 2017

yes its shop rent.. but since i am a composition Dealer .. i can't claim ITC and i have pay tax on rent @ 18% out of pocket and it seems nowhere in gst act their is a proper explanation on this.

Abhinandan (student) (139 Points)
Replied 04 October 2017

sec 9(4) says exceeds 5000 per day.. but rent is paid periodically as per rent agreement for the usage of space, which is like a countinues supply till the agreement is revoked. then why should i pay on rcm when it cannot be determined as a per day inward supply of service exceeding 5000 limit. ?

Sujit Saha (243 Points)
Replied 04 October 2017

As I mentioned earlier, that it depends on the deed, I think if, the deed allows to calculate the rent, per day basis and you are paying as same, then you can do this. In that case you can raise a self invoice for rent per day

Abhinandan (student) (139 Points)
Replied 04 October 2017

Thank u sir, but this RCM is ludicrous.. rent is not a daily expense..and agreement on payment of rent cannot be made on daily basis.. its double taxing for composition dealers ..

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Sujit Saha (243 Points)
Replied 04 October 2017

You're right. Thanks

anshul aggarwal (Consultant) (1074 Points)
Replied 04 October 2017

That is why composition in not advisable in most of the cases

Abhinandan (student) (139 Points)
Replied 04 October 2017

composition scheme is actually very beneficial for small enterprises.. but it is this RCM rules that makes no sense at all... RCM applicability takes the benefits out of composition scheme...

RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 04 October 2017

Yes... I agreed to Mr Anshul Aggarwal.,
This the difficult in Composition Scheme. Before Opting composition scheme first of analyse the difficult then only opt to it. After opted we can't break the rules. Just follow the rules. If it's not convenient then escape from scheme. No other way...

Abhinandan (student) (139 Points)
Replied 04 October 2017

my question was not whether composition scheme is good or bad or beneficial or RCM is the criteria to opt for composition scheme... its about RCM on rent which says aggregate Taxable value not exceeding 5k per day so in that case value of a rent is for a month.. so is it possible to allocate it as per day and then check whether RCM is applicable... Read the question please...

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RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 04 October 2017

Thank you for advice for reading above said query....

RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 04 October 2017

In my view.,
No way for above said way...

anshul aggarwal (Consultant) (1074 Points)
Replied 04 October 2017

Abhinandan,

you are trying to manipulate the law as per your convenience to evade taxes. Rent is a monthly event and in my opinion cannot be broke in daily event. Also your rent deed must be clearly saying that Rent is payable per month and not daily.
Only way to do so is if the property belongs to a number of people and everyone gives bill of rent on different date.