Applicability of GST on Rent: Understanding the Reverse Charge Mechanism (RCM)

 The 54th GST Council Meeting introduced significant changes concerning the renting of commercial properties. One key decision was subjecting the renting of commercial property by an unregistered person to a registered person under the Reverse Charge Mechanism (RCM). This move aims to curb revenue leakage and improve compliance.

Here's a breakdown of the new rules:

  1. Renting of Residential Dwelling to a Registered Person

    • Supplier: Any person (registered or unregistered)
    • Recipient: Registered (Regular/Composition)
    • GST Applicable: Effective from 18/07/2022
    • Person Responsible for GST: Recipient
    • Mechanism: RCM

  2. Renting of Commercial Property

    • Supplier: Registered (Regular)
    • Recipient: Unregistered
    • GST Applicable: Effective from 1/07/2017
    • Person Responsible for GST: Supplier
    • Mechanism: FCM (Forward Charge)

  3. Commercial Property Renting

    • Supplier: Unregistered
    • Recipient: Registered (Regular/Composition)
    • GST Applicable: Effective from 10/10/2024
    • Person Responsible for GST: Recipient
    • Mechanism: RCM

Key Points to Remember:

  • Under the RCM, Input Tax Credit (ITC) can be claimed later by the recipient, but Composition Dealers are not eligible for ITC.
  • Rent payments must be made in cash, and the GST must be deposited by the recipient under the RCM.

Stay GST compliant! Whether you are renting residential or commercial property, ensure you understand these changes to avoid penalties and optimize your tax processes.

📞 Need help with GST compliance?
Contact us: +91 9600076134 / 6374812546
📧 Email: auditsiva2@gmail.com
🌐 Website: www.taxlaservices.com

#GSTOnRent #RCMExplained #CommercialRentGST #TaxCompliance #GSTConsulting #TaxlaServices #RCMUpdates #RealEstateRent #ITCEligibility #GSTPractitioners




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