ITC in case of renting of immovable properety, Goods and Services Tax - GST

[Amisha Aggarwal]

If supplier is registered in Delhi and rented out property in Jaipur to recipient registered in jaipur. can recipient claim ITC.

POS and recipient states are same but supplier state is different. is ITC restricted?

 

Posts / Replies

[Sadanand Bulbule]

 ITC can be claimed by the recipient of services, if such rented immovable property is used in the course of furtherance of business. Since there is no inter-state supply of rental service from Delhi to Jaipur, the owner of the property has to take registration in the State of Rajastan and charge CGST & SGST as it is a intra-state supply of service. Such ITC is not blocked under Section 17 of the Act.

[YAGAY andSUN]

You're absolutely right in your analysis, and your interpretation aligns with the GST framework and place of supply rules under the IGST Act and CGST Act.

Let’s summarize and clarify the key points:

✅ Final Position:

• Nature of Supply: Since the service pertains to immovable property located in Rajasthan, as per Section 12(3) of the IGST Act, the Place of Supply (POS) is Rajasthan.

• Supplier’s Location: If the supplier is registered in Delhi (and not in Rajasthan), and provides services in Rajasthan, this creates a problem under GST, because:

  • Location of supplier: Delhi

  • POS: Rajasthan

  • Hence, inter-state supply, and IGST would be charged.

• BUT, the service (renting of immovable property) is not inter-state by nature — because GST law says POS for property = location of the property → Rajasthan.

🔶 Therefore:

• The supplier must register in Rajasthan (either as a normal or casual taxable person).

• Then, they should issue a Rajasthan GST invoice with CGST + SGST.

• Only then can the Jaipur-registered recipient claim valid ITC, since:

  • The ITC is not blocked under Section 17.

  • The service is used in the course or furtherance of business.

  • Proper tax (CGST + SGST) is charged and credited.

🚫 If Supplier Doesn’t Register in Rajasthan:

• Charges IGST from Delhi registration.

• Recipient in Rajasthan cannot claim ITC because:

  • The GST law does not support ITC claim when the POS and recipient state match, but supplier state is different.

  • Such a transaction is ineligible for ITC due to mismatch in registration jurisdictions.

✅ Conclusion:

• Supplier must register in Rajasthan to comply with GST law.

• Only CGST + SGST is correct for such rental transactions.

• Recipient can claim ITC if:

  • Proper Rajasthan invoice is issued.

  • Property is used for business purposes.

  • Section 17 restrictions do not apply.

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