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WHETHER GST APPLICABLE ON RENT OF COMMERCIAL PROPERTY?

Kapil Jain (Chief Accountant) (106 Points)

30 December 2024

Dear sir/ Madam,

I have Pvt Ltd. Company registered under GSt in Mumbai and the company has 1 residential property in mumbai, the company ois planning to give the residential property on rent, my query is whether GST is applicable on letting out such residential property on rent.

Please guide..

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2 Replies

Sudhir Kulshreshtha (Advocate) (190 Points)
Replied 30 December 2024

Under the GST framework in India, the applicability of GST on renting out a residential property depends on the purpose for which the property is rented. Here are the key points relevant to your query:

1. If the residential property is rented for residential use:
Renting out residential property for residential purposes is exempt from GST, irrespective of whether the owner is an individual or a company.

2. If the residential property is rented for commercial use:
If the residential property is rented out for purposes other than residential use (e.g., office, guest house for employees, or commercial activities), it will attract GST at the rate of 18% on the rental income.

3. Additional Points to Consider:

If your company's aggregate turnover (including rental income) exceeds the GST threshold limit (₹20 lakh for most states, ₹10 lakh for special category states), GST registration and compliance will be applicable.

As the property is owned by a Pvt. Ltd. company, and if the rent is for commercial purposes, GST will likely apply even if the rental income alone does not cross the threshold.

Conclusion:

Residential Use: No GST applicable.

Commercial Use: GST 18% GST is applicable .

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