GST on house rent! True or False?

By Apekshita Sonowal

A news has been circulating all over social media that now one has to pay 18% Goods and Services tax on house rent. This has made a huge ruckus among the netizens. However, Govt. of India clears out that the news is misleading.

According to the Government fact-checker, Press Information Bureau Fact Check clarified on Twitter on August 12, Friday that the information is fake and misleading and that GST is not applicable when a house is rented to a private person for personal use. GST is also not applicable even when the proprietor or partner of a firm wants to rent a residence for personal use. Having said that, the renting of the residential unit is taxable only if the property is rented to a business entity.

The tweet by PIB Fact Check mentioned three points and they are-

1)      Renting of residential unit taxable only when it is rented to business entity.

2)      No GST when it is rented to private person for personal use.

3)      No GST even if proprietor or partner of firm rents residence for personal use.

Abhishek Jain, Partner, Indirect Tax at KPMG said this is a welcome clarification by the government which will provide a much –needed relief to GST-registered proprietors or partners in GST-registered firms who take on rent immovable property for their personal use such as renting of a house for family accommodation.

“This is welcome clarification by the Government that will prevent unnecessary panic where people were under the false belief that residential renting of immovable property to unregistered persons would also attract GST. More importantly, this clarification provides the much-needed relief to GST-registered proprietors or partners in GST-registered firms who take on rent immovable property for their personal use, e.g. renting of a house for family accommodation, in which case the Government has rightly clarified that GST will not be applicable,” Jain said in a statement shared with media.

(Source - Financial Express)