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RCM is to be paid for rent paid

Suthaniya P (141 Points)

09 October 2024

Taxpayers Reverse charge Mechanism is to be paid for rent paid?

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (179903 Points)
Replied 10 October 2024

Notification No. 09/2024 – Central Tax (Rate), dated October 8, 2024. This notification brings under the ambit of the Reverse Charge Mechanism (RCM) the renting of commercial property when an unregistered person provides the service to a registered person. The new rule will be effective from October 10, 2024.

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (179903 Points)
Replied 10 October 2024

As per Entry No. 5AA of Notification No. 13/2017-Central Tax(Rate) dated 28-06-2017, Service by way of renting of residential dwelling by ANY PERSON to a registered person is subject to Reverse Charge Mechanism (‘RCM’). This entry was applicable w.e.f. 18th July 2022. The above entry implies that the registered recipient, availing services of renting of residential property, is supposed to discharge GST on RCM basis. In this case RCM is applicable even if the supplier is unregistered or the property is used for commercial purposes. Recently, Entry No. 5AB is added to the Notification for levying RCM on commercial properties. The said entry states that RCM is applicable on Service by way of renting of any property other than residential dwelling by unregistered person to a registered person. This entry is applicable w.e.f. 10th October 2024.

Manoj Punjabi (Accountant) (283 Points)
Replied 10 October 2024

Dear Mr. Dhirajlal Rambhai Ji,

Your reply is very clear, as always, very helpful.

I have some doubts, please help.

1) Is ther any threshold limit for rent amount to fall under RCM.

2) Can register person use that ITC credit of RCM paid on rent.

Thanks in advance

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (179903 Points)
Replied 10 October 2024

The threshold limit applied only for registration under GST act; or for TDS deduction. Not over rent paid by registered person (to unregistered landlord).
Yes, if regular supplier having taxable supplies; not if composition dealer.