GST position on residential property let out to registered person

1. GSTPOSITIONONRESIDENTIALPROPERTYLETOUTTO REGISTEREDPERSON AUTHOR:SUSHILKUMARANTAL https://taxguru.in/goods-and-service-tax/gst-position-residential-property-registered-person.html [NotificationNo.04/2022-CT(Rate)dated13.07.2022andNotificationNo.05/2022-CT(Rate)dated 13.07.2022,both w.e.f. 18.07.2022] Prior to amendment w.e.f. 18.07.2022, if a person has given his residential property to any person for residential purpose (other than Commercial Purpose) is exempted from GST. As per Sl. No. 12 of Notification No. 12/2017-CT (Rate) dated 28.06.2017 ‘Services by way of renting of residential dwelling for use as residence is exempt supply. Thesaid exemption wasgiven in Sr.No. 12 inthe aforesaidNotification as under- Chapter, Section, Heading, GrouporServiceCode(Tariff) (2) Sl.No. (1) 12 DescriptionofServices (3) Rate(percent.) (4) NIL Conditio (5) NIL Heading9963orHeading99721Servicesbywayofrentingofresidential dwellingforuseasresidence. But if residential property has been given on rent for ‘Commercial Purposes’ than it was not an exempt supply andserviceiscoveredunder‘ForwardCharge’basisi.e.supplier hastochargeGSTonforwardchargebasis. Now, as per Notification No. 04/2022-CT (Rate) dated 13.07.2022 (w.e.f. 18.07.2022) the aforesaid exemption given by Sl. No. 12 of Notification No. 12/2017-CT (Rate) dated 28.06.2017 has been restricted. By the NotificationNo.04/2022-CT(Rate)dated13.07.2022,thefollowingamendmenthasbeenmadein NotificationNo. 12/2017-CT (Rate) dated28.06.2017as under-

2. “againstserialnumber12,incolumn(3),afterthewords “asresidence”,thewords“exceptwherethe residentialdwelling is rentedto a registered person”shall be inserted; Nowbytheaforesaidamendment,fullexemptionmaybereadasunder- “Servicesbywayofrentingofresidentialdwellingforuseasresidenceexceptwheretheresidentialdwelling isrented to a registered person” It means if residential property is given to a registered person, then GST shall be payable. If residential property isgiventoanunregisteredperson(i.e.nottoaregisteredperson)foruseasresidenceonly,thentheexemption byway ofNotification No.12/2017-CT (Rate) dated28.06.2017shallremain continue. PleasealsonotethattheGovernmenthasamendedtheoriginalNotificationNo.13/2017-CT(Rate)dated 28.06.2017bywayofissuinganewNotificationNo.05/2022-CT(Rate)dated13.07.2022.Asperthisnew Notification,anewservicehasbeenadded5AAinNotificationNo.05/2022-CT(Rate)dated13.07.2022 “serviceby way ofrenting of residential dwellingto a registeredperson”. Therelevantamendmentinthisnotificationisasunder:- “(3)afterserialnumber5Aandtheentriesrelatingthereto,thefollowingserialnumberandentriesshallbe inserted,namely: – (2) Servicebywayofrentingofresidentialdwelling toa registeredperson. (1) (3) (4) “5AA Anyperson Anyregisteredperson” Before the Notification No. 05/2022-CT (Rate) dated 13.07.2022, if residential dwelling is given on rent for commercial purposes than it is not exempt supply and service is covered under forward charge basis i.e. supplier hastochargeGSTonforwardchargebasis.ButaftertheNotificationNo.05/2022-CT(Rate)dated 13.07.2022, even supplier is a registered person, GST is payable on RCM basis. Please note that if any person (whether registered or not) gives service by way of rending of residential dwelling to a registered person, GST is payableonreversechargebasis.NotificationNo.05/2022-CT(Rate)dated13.07.2022specifiedonlyrenting of residential dwelling and does not speak about the use of same i.e. residential dwelling may be used for residentialpurpose or commercial purpose. For example: If a person (whether registered of unregistered) gives his residential dwelling to a registered person,thenGSTshallbepayableonRCMbasis.Itdoesnotmatterthatrecipientusethispropertyfor residentialorcommercialpurpose.Earlierresidentialdwellingisgivenonrentforcommercialpurposesthanit is not exempt supply and service is covered under forward charge basis i.e. supplier has to charge GST on forwardcharge basis. Innutshellaspermyunderstanding:

3. If residential property is given to an ‘unregistered person’ (i.e. not to registered person) for ‘use as residence only’, then the exemption by way of Notification No. 12/2017-CT (Rate) dated 28.06.2017 shallremain continue. Or If residential property is given to an unregistered person (i.e. not to registered person) for use as ‘commercialpurpose’,thentheexemptionbywayofNotificationNo.12/2017-CT(Rate)dated 28.06.2017shall notbe granted andsupplier hasto charge GSTon ‘Forward Charge Basis’. Ifresidentialpropertyisgiventoa‘RegisteredPerson’foranypurposewhetherresidentialor commercial, GST shall be payable under “RCM basis” by way of Notification No. 05/2022-CT (Rate) dated13.07.2022. ***** Disclaimer: Nothing contained in this document is to be construed as a legal opinion or view of either of the author whatsoever and the content is to be used strictly for informational and educational purposes. While due care has been taken in preparing this article, certain mistakes and omissions may creep in. the author does not acceptanyliabilityforanylossordamageofanykindarisingoutofanyinaccurateorincompleteinformation inthis document nor forany actions taken in reliancethereon.