Renting of residential dwelling by any person to a person registered under GST triggers applicability of GST from 18th July, 2022, irrespective of the fact that such residential unit is used for residential purposes or commercial purposes. Further, by virtue of the Notification No. 05/2022-Integrated Tax (Rate) dated 13th July 2022, the payment of GST on services by way of renting of residential dwelling to a registered person is to be made by registered recipient of service under reverse charge mechanism, irrespective of the registration status of service provider.
The GST Council in its 48th meeting was held in Delhi on 17th December 2022 inter-alia made the recommendation that no GST is payable where the residential dwelling is rented to a registered person if it is rented it in his/her personal capacity for use as his/her own residence and on his own account and not on account of his business as such renting will now be an exempt supply.
In line with the above recommendation changes have been made to the exemption notification as under:
Notification:
The CBIC vide Notification No. 15/2022-Central Tax (Rate), dated 30th December 2022 has made amendment in Notification No. 12/2017-Central Tax (Rate), dated 28th June 2017 (“Exemption Notification”) in order to implement the recommendations of the 48th GST Council Meeting, w.e.f. 1st January 2023, as under:
| Sl. No. | Chapter, Section, Heading, Group or Service Code (Tariff) | Description of Services | Description of supply of Goods (Revised) | Rate (per cent.) | Condition |
| 12 | Heading 9963 orHeading 9972 | Services by way of renting of residential dwelling for use as residence except where the residential dwelling is rented to a registered person. | Services by way of renting of residential dwelling for use as residence except where the residential dwelling is rented to a registered person. Explanation. – For the purpose of exemption under this entry, this entry shall cover services by way of renting of residential dwelling to a registered person where, – (i) the registered person is proprietor of a proprietorship concern and rents the residential dwelling in his personal capacity for use as his own residence; and (ii) such renting is on his own account and not that of the proprietorship concern | Nil | Nil |
A similar notification has been passed under the IGST Act and the UTGST Act.
Read / Download CGST (Rate) Notification: https://taxinformation.cbic.gov.in/view-pdf/1009595/ENG/Notifications
Read / Download IGST (Rate) Notification: https://taxinformation.cbic.gov.in/view-pdf/1009599/ENG/Notifications
Read / Download UTGST (Rate) Notification: https://taxinformation.cbic.gov.in/view-pdf/1009603/ENG/Notifications
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Frah Saeed is a law graduate specializing in the core field of indirect taxes and is the Co-founder of taxwallah.com. She has authored many publications on GST and is into full-time consultancy on GST to big corporates. She as a part of taxwallah.com heads a team comprising of Chartered Accountants and Advocates and plays a key role in our mission to disseminate GST knowledge to all.
