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GST on service of renting of residential dwelling w.e.f. 18-07-2022 Read more at: https://taxguru.in/goods-and-service-tax/gst-service-renting-residential-dwelling-w-e-f-18-0, Goods and Services Tax - GST

Issue Id: - 118055
Dated: 16-7-2022
By:- Bharat Cholleti
GST on service of renting of residential dwelling w.e.f. 18-07-2022 Read more at: https://taxguru.in/goods-and-service-tax/gst-service-renting-residential-dwelling-w-e-f-18-0

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Dear sir,

As per NNo.5/2022 CTR, A new service has been added 5AA in NNo.13/2017 " service by way of renting of residential dwelling to a registered person". my under standing is if a registered person receive the service of residential portion or house on rent is liable to pay tax@18% under Reverse charge. Is it correct. As a department how do they know these persons have taken residence ? As a registered person I have taken a shop which is a residential property and running the shop/offices do they liable to pay GST@18% from 18-7-2022. kindly clarify. Thx in advance.

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Posts / Replies

Showing Replies 1 to 15 of 19 Records

1 Dated: 17-7-2022
By:- Ganeshan Kalyani

Sir, a registered person taking a residential dwelling on rental basis has to pay GST on RCM. This means the service provider is an unregistered person. Suppose service provider is a registered person then he would himself charge GST on invoice raised by him and pay GST i.e. forward charge.


2 Dated: 17-7-2022
By:- Amit Agrawal

With due respect and in my humble view, 'where the residential dwelling is rented to a registered person', liability to pay GST is on 'recipient' under RCM, IRRESPECTIVE of the fact that service provider / supplier is also a registered person.

These are strictly personal views of mine and the same should not be construed as professional advice / suggestion.


3 Dated: 17-7-2022
By:- Amit Agrawal

About the query raised by the querist, it is not clear to me how 'shop' is a residential dwelling / property.


4 Dated: 17-7-2022
By:- SHARAD ANADA

Notification 05/2022 CTR is issued In exercise of the powers conferred by sub-section (3) of section 9 of the Central Goods and Services Tax Act, 2017. Section 9(3) reproduced here under;

(3) The Government may, on the recommendations of the Council, by notification, specify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both.

So here it covers supply of "SPECIFIED CATEGORIES" of supplies whetere it is supplied by registered or unregistered. As per section 9(3) even If supply made by the registered supplier and it is of a specified category in that case also recipient is liable to pay GST on RCM basis.

This notification is not issued under section 9 (4) of CGST Act. Section 9(4) covers RCM on SPECIFIED CATEGORIES of supply by unregistered person.

Second as per notification 05/2022 CTR entry 5AA specified only Residential dewalling and does not speaks about the use of residential dewalling i.e. residential dewalling may be used for residential purpose or commercial purpose.

As per notification 12/2017 CTR Services by way of renting of residential dwelling for use as residence is exempt supply. So if residential dewalling is given on rent for commercial purposes than it is not exempt supply and service is covered under forward charge basis i.e.supplier has to charge GST on forward charge basis (if AATO of supplier is more than 20 lakh)

Before notification 05/2022 CTR, For e.g bank is running it's business residential dewalling in that case use of residential dewalling is for commercial purpose and supplier is liable to pay GST on forward charge basis. Now after notification 05/2022 even if supplier is registered person GST is payable on rcm basis. Here one has to look the RESIDENTIAL DEWALLING and not the purpose for which it is used i.e. for residential purpose/ commercial purpose.

As per notification 05/2022 CTR if supplier is ANY PERSON, GST is payable by ANY registered person.

As per section 24(iii) Person who is required to pay tax under RCM is required to register compulsorily.

Now question is person who is recipient of renting of residential dewalling service (for residential purpose/ commercial purpose) is he liable for compulsory registration?


5 Dated: 17-7-2022
By:- Amit Agrawal

I am of the view that Section 24 (iii) does NOT force any unregistered person - who is not liable to take registration either u/s 22 or due to Section 23 - to take GST registration merely because it is recipient of 'Renting of Residential Dwelling Services' from 'any person located in the taxable territory'.

Reason behind my views can be seen in very lengthy discussion we had under Issue ID 117679 bearing subject-line as 'RCM provisions on RWA (Residents Welfare Association)'.

I believe that very same reason applies for situation being discussed here.

These are strictly personal views of mine and the same should not be construed as professional advice / suggestion.


6 Dated: 18-7-2022
By:- Bharat Cholleti

Sir,

Some of the shops attached to a residential property or office premises will be in residential property such persons are not liable to pay Gst?only taking residential dwelling is only taxable under RCM by regd person.


7 Dated: 18-7-2022
By:- Amit Agrawal

I wish to draw attention to recently amended exemption entry No. 12 from Notification No. 12/2017- Central Tax (Rate) as amended till date.

Exemption is for 'Services by way of renting of residential dwelling for use as residence', with an exception 'where the residential dwelling is rented to a registered person'. The word 'The' is for 'residential dwelling given on rent for use as residence' in my view.

So, when any residential dwelling is given on rent for use as 'Shop / Offices' etc., exemption from GST continues to be NOT available even if recipient is an unregistered person (either u/s 22 or due to Section 23). And in case a case of unregistered recipient, liability to pay GST will continue to be on the supplier on the forward charge basis (i.e. when either supplier is registered or liable to be registered).

Now, I want to draw attention to recently added entry at 5AA of Notification No. 13/2017- Central Tax (Rate) as amended till date.

If any residential dwelling is given on rent IRRESPECTIVE OF USE (i.e. EITHER for use as residence OR for use as 'Shop / Offices' etc.) AND if recipient is registered under GST, then, liability to pay GST will be on such recipient registered person under RCM. In this case, supplier can NOT charge GST against renting of residential dwelling (for use is as 'Shop / Office' etc.) under forward charge EVEN IF he is registered.

These are strictly personal views of mine and the same should not be construed as professional advice / suggestion.


8 Dated: 18-7-2022
By:- Amit Agrawal

Needless to say, Services by way of renting of Shop / Office spaces per se (i.e. premises not meant / made as 'residential dwellings') are not covered 'either under exemption-entry or under RCM entry, which are part of these discussions'.

And such services by way of renting of Shop / Office spaces continues to be taxable / non-exempted and under forward charge basis (unless supplier is located in a non-taxable territory).

These are strictly personal views of mine and the same should not be construed as professional advice / suggestion.


9 Dated: 20-7-2022
By:- VASANTH KUMAR

Dear sir,

Going by the intention or object of insertion of entry 5AA under RCM, the recommendations of 47th GST Council Meeting, under category C4, sl.no.2 where it is mentioned that "Exemption on the follwoing services is being withdrawn", clause (f) mention as "renting of residential dwelling to business entities (registered person)". With this it is understood that, there was exemption available if residential dwelling is rented to the registered person for use as residence and no exemption when residential dwelling rented for commercial purpose.

In order to give an effect to this the exemption entry sl.no.12 of 12/2017 got amended as "services by way of renting of residential dwelling for use as residence except where the residential dwelling is rented to a registered person.

In nutshell, (i) renting of residential dwelling to a registered person for use as residence taxable under RCM i.e., registered person (recipient) is liable to pay tax; (ii) Renting of residential dwelling to un-registred person exempt; and (ii) Renting of residential dwelling for commercial purpose taxable in the hands of supplier under FC irrespective whether recipient is registered or not.


10 Dated: 20-7-2022
By:- VASANTH KUMAR

Dear sir,

with due respect i would like to differ amitsir view i.e., "If any residential dwelling is given on rent IRRESPECTIVE OF USE (i.e. EITHER for use as residence OR for use as 'Shop / Offices' etc.) AND if recipient is registered under GST, then, liability to pay GST will be on such recipient registered person under RCM. In this case, supplier can NOT charge GST against renting of residential dwelling (for use is as 'Shop / Office' etc.) under forward charge EVEN IF he is registered", based on reasoning given in my earlier reply.


11 Dated: 20-7-2022
By:- Amit Agrawal

Dear Shri Vasanth Kumar Ji,

With total respect for your views, kindly now allow me to elaborate why I cannot agree with them:

A. You have quoted one of recommendations of 47th GST council meeting which is about withdrawal of exemption (i.e. "renting of residential dwelling to business entities (registered person)").

A1. But, what is worth nothing is that above-said recommendation does NOT throw any light what is made 'taxable under RCM basis u/s 9 (3)' and what is object / intention behind insertion of entry 5AA. Anyway, 'wordings used by GST council while recommending' does not override 'unambiguous & clear meaning of wordings used in the official notifications'.

B. Then, you have quoted changes made in exemption at entry No. 12 to give effect the above-said recommendations of 47th GST council meeting.

B1. But again, this amendment does NOT deal with what is made 'taxable under RCM basis u/s 9 (3)'.

C. Very surprisingly, you completely ignored what is made 'taxable under RCM u/s 9 (3)' vide Notification No. 05/2022-Central Tax (Rate) by inserting Serial No. 5AA in Notification No. 13/2017- Central Tax (Rate).

C1. Again with total respect to your views, I strongly feel that one cannot arrive at conclusions about what is covered 'taxable under RCM basis u/s 9 (3)' and what is not, without even referring to wordings used in Notification No. 13/2017- Central Tax (Rate).

C2. And said entry Serial No. 5AA reads as under: 'Service by way of renting of residential dwelling to a registered person.'

C3. This entry does NOT differentiate 'residential dwelling' depending upon use (i.e. for use residence and for use for commercial purpose say as shop or office), where exemption entry specifically deals with ONLY 'residential dwelling for use as residence'.

C4. Moreover, there is no connection between two notifications issued for two difference purposes (one specifying what is exempted and other specifying what 'taxable under RCM basis u/s 9 (3)'). And you have also not provided any legal basis what-so-ever to connect these two different types of notifications to arrive at your views.

In nutshell and in all humility, I stand with my views shared earlier.

These are strictly personal views of mine and the same should not be construed as professional advice / suggestion. I respect contrary views.


12 Dated: 20-7-2022
By:- Shilpi Jain

The moment a residential dwelling is rented to a registered person, liability under rcm is attracted.

The end use of such dwelling I e. Whether as residence or for commercial use, and the status of the service provider i.e. whether registered or otherwise, are all not relevant


13 Dated: 22-7-2022
By:- VASANTH KUMAR

Dear sir / madam

can anybody throw light on the issue whether notification can be issued under RCM without there being a discussion taking place at GST Council Meeting on the particular issue .

as per my knowledge and reading the 47th GST Council Meeting Recommendations, with respect to renting of residential dwelling used as residence by registered person (recipient) which was withdrawn from exemption (refer C4, 2(f)) but there was no discussion on renting of residential dwelling to a regitered person, bringing under RCM

whether notification can be issued in such a situaion or not?


14 Dated: 22-7-2022
By:- Amit Agrawal

Notification No. 05/2022-Central Tax (Rate) dated 13.07.2022 starts as follows: "In exercise of the powers conferred by sub-section (3) of section 9 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, hereby makes the following further amendments ..................."


15 Dated: 22-7-2022
By:- Amit Agrawal

* in above post of mine, please read date of notification as 13.07.2022 (& not 05.07.2022)


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