18% GST To Be Imposed On All Home Rentals Across The Nation From July 18
New Delhi, 20th July 2022: The revenue division of the Finance Ministry will impose an 18% GST on all home rentals across the nation from July 18.
According to the notification, a residential property rented to a GST-registered individual would be subject to an 18% tax. Additionally, the lessor is released from liability because the lessee is responsible for paying the tax.
Under the GST regime, mandatory registration would be required for everyone who made a supply of goods or services worth more than Rs. 40 lakh or Rs. 20 lakh, respectively.
With this change, the lessee who rents a home to use as a guest house, as a place to keep employees or directors, or both, would be taxed.
According to GST tax specialist Raveedaran Muthuswamy, an individual or owner who registered for GST and has rented a residential property for personal use rather than as a business expense would also be subject to tax.
He said, “Taxing rents in a nation like India, where the majority of citizens don’t own homes, has been a touchy subject ever since the introduction of the service tax. Only commercial property was subject to the 2007 introduction of the service tax on rents. When GST was first established in 2017, residential property was excluded and remained to be subject to it.”
Hitesh Thakkar, Vice-President of NAREDCO West, thinks that this choice will significantly affect the mindset of homebuyers.
Anand Gupta, Head of the RERA Committee and the Builders Association, stated that the Reverse Charge Mechanism is applicable to all residential units with registered GST numbers (with a turnover of Rs 20 lakh).
