Posted Under Home Buying Tips, Real Estate Rules & Regulations, GST On 30 July, 2022
Union Finance Ministry Nirmala Sitharaman on July 13th, 2022 issued Review of central tax announcement wherein it brought residential rentals under GST ambit from July 18th 2022 onwards with immediate effect.
The previous June 2017 order, bringing residential dwelling rented to a registered person under 18% GST tax payment.
who is living in a rented flat and doesn't have a registered GST number, won't have to pay 18 of GST. Meaning, that a salaried family staying in a rented house need not be needed to pay 18 GST on settlements to the government if he's not a listed person.
As per the new July 2022 notification, when a residential dwelling is been given for rent to a person registered under GST it would be subjected to GST at the rate of 18%.
The 18% GST on residential rentals depends on case to case basis. For example, builders accommodate tenants of redevelopment projects in privately rented flats. In this, the case will the builders have to bear the 18% GST is questionable.
When you comes in the GST ambit?
The lessee who takes a residential property on rent for the purpose of a guest house or for providing to their employee or directors would be subjected to tax. Supposedly, if a particular company takes a few flats on rent for its employee, so now as per the new obligation, it also needs to show the payment of 18% GST on the rentals to the government while filing the returns.
Who gets a GST number?
Any person who makes a supply of service more than 20 Lakhs and a supply of goods more than 40 Lakhs is liable for mandatory registration. A few states have different thresholds for registration.
What is the fear of this new corrective?
who is registered under GST and has taken a residential property on rent for his "personal use" and not as a business expenditure, would also be subjected to tax. Stakeholders want immediate government intervention.
What does the industry think about residential rentals 18% GST?
The residential rental growth at absolutely 2% to 3% in comparison to commercial rental yield which is highly attractive at 8% to 10%. Imposing an 18% GST on residential rentals is detrimental as it will hurt the investments in residential properties. It shall be applicable to the individual liable to be registered under the Act of GST and thus the onus of paying tax lies on the lessee and not the lessor. High GST will also demotivate corporate entities to further offer rental housing to their employees, which shall impact institutional rental business.
By LNN (Liyaans News Network)