Dear Experts
My A is residing in rented property since 45 years (Pagdi System).
now Mr.A going to surrender his tenancy rights to landlords against consideration of 40 Lacs.
is Mr.A liable to pay GST on this transaction??
Circular No.44/18/2018-CGST is not specifically speaks about residential property.
kindly clarify
Certainly! Let’s address the GST implications related to the surrender of tenancy rights in a residential property.
Transfer of Tenancy Rights and GST:
The activity of transferring tenancy rights against consideration (such as tenancy premium) is considered a supply of service under the Goods and Services Tax (GST) regime.
Specifically, Schedule II of the CGST Act declares that any lease, tenancy, easement, or license to occupy land is a supply of services1.
Exemption for Residential Dwelling:
However, there is an exemption for the grant of tenancy rights in a residential dwelling for use as a residence.
When an outgoing tenant surrenders tenancy rights against consideration (part of the tenancy premium), it is liable for GST2.
Applicability of GST:
In Mr. A’s case, since he is surrendering his tenancy rights in a residential property, GST is applicable.
The rate of GST for such services is typically 18%3.
Circular No. 44/18/2018-CGST:
While Circular No. 44/18/2018-CGST does not specifically mention residential property, the legal provisions in the GST Act and Schedule II govern the treatment of tenancy rights.
Therefore, Mr. A should consider the applicable GST rate and comply with the necessary requirements for this transaction.
In summary, Mr. A is liable to pay GST on the surrender of his tenancy rights against the consideration of 40 Lacs, given that it involves a residential dwelling.
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