Coverfox.com
  • Insurance
    • Car
      • Car Insurance
      • Companies
      • Third party car insurance
      • Comprehensive car insurance
      • Car insurance calculator
      • New car insurance
      • Zero Dep Car Insurance
      • Buy Car Insurance
      • Compare Car Insurance
    • Bike
      • Two Wheeler Insurance
      • Two Wheeler Insurance Companies
      • Two Wheeler Insurance Claim
      • Two Wheeler premium Calculator
      • Third party Bike insurance
      • Multiyear Bike Insurance
    • Health
      • Health Insurance
      • Companies
      • Mediclaim Policy
      • Individual Health Insurance plans
      • Critical illness insurance
      • Senior citizen health insurance
      • Arogya sanjeevani policy
      • Coronavirus Health insurance
    • Term
      • Term Insurance
      • Companies
      • Life insurance
      • Life Insurance calculator
      • Term Insurance calculator
      • Life Insurance Plans
      • 1 crore term insurance
      • Compare Term Insurance
      • Buy Term Insurance
      • Term Insurance Renewals
    • Investment
      • Investment Plans
      • Companies
      • Buy Investment Plans
      • Child Plans
      • Pension Plans
      • ULIP
      • Endowment Policy
      • Tax saving investment
      • Buy ULIP
      • Best ULIP
  • About Coverfox
    • About us
    • Insurance Blog
  • Claims
  • Contact us
  • Login
Best investment policies at lowest premiums.
Top performing investment plans, better than mutual funds
Plans with zero commissions
and lowest charges in the market.
tax-free returns
Benefits for 80C, 10(10D) and no LTCG.
4.7/5
star star star star half star
4.6/5
star star star star half star
Highest rated insurance website

Impact of GST on Rent

Impact of GST on Rental Income

With the implementation of GST or Goods and Services Tax, collecting taxes from various sectors has become extremely convenient and structured. One such sector that has been the source of income for many over the years is rent. In this article, we shall highlight the impact that GST has had on rent post implementation. Let us also understand scenarios where GST varies for commercial as well as residential properties.

Pre-GST Rules

Before the introduction and implementation of GST, the owner of the property had to get a service tax registration done, in case his total taxable service exceeds Rs.10 lakhs per year, inclusive of the rental income from all his properties. On the other hand, if his taxable income from all properties did not add up to more than Rs. 10 lakhs, then the landlord would not be charged with service tax. Another significant rule was that only commercial properties that have been rented out would be obliged to pay service tax @ 15%. This would be applicable even if a residential space has been rented out for commercial use. While rental income from residential properties did not levy service tax, the same tax of 15% was applicable on rent for commercial properties.

Post GST Rules

After the introduction of GST, a significant transformation has been seen in the tax collection process. Not only has it become streamlined, but has also become uniform in a lot of sectors, thereby affecting rental income in the same way. Now, for renting out a residential property, one would not have to pay any GST as it is exempt from the same. Also, post implementation of GST, the threshold limit of applicability has been revised from Rs. 10 lakhs to Rs. 20 lakhs for businesses and any other type of lease or renting.

What is the effect of GST on rent?

GST has positively affected the rental income of an individual. As mentioned earlier, when a property is rented out, only for residential purpose, the same is exempt from Goods and Services Tax. However, it is important to note that any type renting out (except residential) or lease of immovable asset for commercial reasons attracts a GST at 18%, as it is considered a supply of service.

As it is aforementioned before, the applicable threshold limit of GST has been increased to Rs.20 lakh from Rs.10 lakh, after GST was implemented. This has favoured land owners, thereby relaxing them of another Rs. 10 lakhs income earned.

Let us understand this with an example-

Mr. Sharma, who lives in Mumbai, has let out his property in Goa. As a rental income, he receives Rs. 5 lakhs annually. Now, Mr. Sharma is not obliged to register himself under GST as his rental income does not exceed Rs. 20 lakhs. Also, his place of supply is Goa, which is an immovable asset.

However, if Mr. Sharma had rented out his property in Goa for a commercial purpose for Rs. 2 lakhs per month, he would have to register for GST as his annual rental income would come to Rs. 24 lakhs.

How to calculate GST when you rent out a property for commercial purposes?

Following are the ways to calculate GST when a property is rented out for commercial purposes-

  • In case of commercial spaces on rent, the applicable GST will be calculated at 18% on the taxable income as rent here is treated as supply of service.
  • Rent for shops and other business spaces is Rs. 10,000 or less per month
  • Rent for community halls or any open area is Rs. 10,000 or less per day
  • In case a registered charitable trust or religious trust owns and manages a religious place that is open for the common folk, such spaces are exempt from GST. However, this is applicable only if, the rent of these rooms is less than Rs. 1000 per day.

Explore more on Saving Schemes

  • Personal Finance NPS Login Registration | Saving Schemes | UAN epf mobile register change
  • EPF e Passbook | EPF Form 31 | How to Correct Your Name in EPF Online
  • Break up of epf contribution | EPF form 19 | Top gold saving schemes in India
  • UAN Registration | Download and Print UAN card | EPF Claim Status
  • PPF vs NSC | EPF Form 11 | HDSC National Pension Scheme
  • Employees Deposit linked Insurance scheme | HDFC PPF Account | EPF Form 2
  • APY vs- NPS | Pran Card | How to register epf grievance online
  • EPF vs EPS | EPF Form 5 if | EPF Form 5
  • PF Withdrawal Rules | PF Withdrawal Rules | PF Withdrawal Rules
  • PF Calculator | EPFO login | NPS Customer Care

Explore more on Gold Rate

  • GRT jewellers gold schemes | Understanding hallmark kdm 916 varities of gold | Kalyan jewellers gold schemes
  • Gold Rate in Tirupati | SBi bank gold schemes | Gold Rate in Punjab
  • Tanishq gold schemes | Gold coin rate in post office | Gold Rate in Tumkur
  • Gold Rate in Anantapur | Gold Rate in Kurnool | Gold Rate in Berhampur
  • Malabar gold schemes | Gold Rate in Sangli Miraj Kupwad | Gold Rate in Salem
  • Gold Rate in Asansol | Gold Rate in Eluru | Gold Rate
  • Gold rate today | Silver Rate in vijayawada | Silver Rate Today

Explore more on Mutual Funds

  • Direct vs regular mutual funds | Mutual funds vs fixed deposits | Registrars cams and Karvy
  • Best mid cap mutual funds | SBI emerging businesses fund | SBI mutual fund customer care number
  • ICICI mutual fund customer care number | Birla sun life mutual fund customer care number | HDF mutual fund customer care number
  • KYC form | UTI mutual fund customer care number | Mutual funds vs hedge funds
  • Birla sun life top 100 fund | Real estate vs mutual funds | Axis bank sip plan | Mutual Funds

Explore more on Fixed Deposit

  • pros and cons of fcnr deposit | Monthly interest payout fd | state bank of hyderabad fd interest rates
  • ICICI nri fd rates | Flexi Fixed Deposit | Syndicate bank fd rates
  • FD schemes for children | Saraswat Bank fd rates | Certificate of Deposit
  • Fixed deposit receipt fdr | fixed deposit double scheme | Andhra bank fd interest rates
  • SBI nri fd rates | Credit card against fixed deposit | fixed deposit rules and regulations
  • Yes bank fd rates | Indusind bank fd interest rates | Fixed Deposit

Explore more on Tax

  • Section 44a | 7th CPC Fitment Table | SAC Codes GST Rates for Services
  • Haryana Road Tax | CSD Price List for Cars and Bikes | Taxable and Non Taxable Allowance for Salaried Individual
  • Reverse Charge GST | Difference Between Take Home Net Gross salary and CTC | Different Uses of ITR1 ITR2a and ITR2
  • 7th CPC Travelling Allowance | Income Tax Assessment | Professional Tax Kerala
  • Exemption on Medical Reimbursement | Sextion 40a-3
  • List of 7th Pay Commission Allowances | Section 154 of the Income Tax Act | What is a stipend is it Taxable
  • SGST CGST IGST | Road Tax Telangana | Medical Allowance
  • City Compensatory Allowance | Section194j | Road Tax Jharkhand
  • TDS Return Form | Section-119 | Road Tax Rajasthan
  • Road Tax Delhi | Goods Exempted Under GST | Tax Benefits on Tuition and School Fees
  • 7th CPC LTC Rules | Capital Gains Calculator | Income Tax Customer Care Number
  • Road Tax Odisha | Luxury Tax in India | Income Tax Return Filing for Insurance Agents
  • Additional Depreciation Income Tax Act | Entry Tax in Karnataka | How to Download ITR-V Acknowledgement
  • 7th CPC Children Education Allowance | Nil Tax Return | Section 80ccg
  • Forms 3CA 3CB 3CD 3CE | Banglarbhumi | Coimbatore Property Tax
  • Jurisdiction Income Tax | Ahmedabad Municipal Corporation Property Tax | Difference Between TIN and TAN
  • Sugam ITR 4S | Taxability of Prequisites | Local Body Tax
  • TDS on FD | How to e-File Revised Return of Income Tax | Income Tax Exemptions for Political Parties in India
  • IMC Property Tax in Indore | KMC Property Tax | Section 80gga
  • Charitable Trusts NGO Income Tax Benefits | Difference Between GPF and PPF | Income Tax Notice to File Returns Compliance Form
  • Income Tax Registration Login | 7th Pay Commission | Goods and Services Tax GST
  • Income Tax | Property Tax | Road Tax | Tax

Other Core Categories

Car Insurance | Two Wheeler Insurance | Health Insurance | Term Insurance | Life Insurance | Investment Plans | Used Cars in India | New Car Insurance

In case of a rented property, what are the provisions for a tax deduction on income tax?

By rule, the landlord or owner of the property given on rent needs to collect applicable GST from the tenant or person paying rent. The amount of GST will be levied on the rent charged. The person paying the rent needs to deduct TDS at 10%, in case the rental amount for the property is more than Rs.1.80 lakh per year. Moreover, TDS applies for both residential and commercial properties. On TDS, there will no GST.

It is vital to note that GST on rent charged for immovable properties by local authorities or the government for a registered person features under Reverse Charge Mechanism. But in case the property is rented to a non- registered person, the government has the right to deduct GST on their own which is called the Forward charge mechanism.

Frequently Asked Questions

What is GST?

Goods and Services Tax (GST) can be defined as ‘an indirect tax (or consumption tax) imposed in India on the supply of goods and services.’

How much TDS is applicable on Rental income?

An individual paying the rent needs to deduct income tax at source at 10%, in case the annual rent of the property is more Rs.1.80 lakhs. Moreover, TDS applies for both residential and commercial properties.

How does GST affect Rent?

The landlord or owner of the property that has been rented out needs to collect GST from the person who pays the rent. This GST will be on the amount of rent payable.

Are individuals required to register when they rent the property to business? If yes, who needs to do so?

A taxpayer who earns excess of the exempted threshold needs to register under GST and pay taxes. So, in case the individual has given the property for commercial use, then he/she will have to register themselves under GST, if he/she gets more than Rs. 20 lakhs as annual rent.

Close
icon Personal Finance icon Tax icon Goods And Services Tax Gst icon Impact Of Gst On Rent
  • Secure
  • Licensed By
  • Payment Options
  • Car Insurance
  • Bike Insurance
  • Motor Insurance
  • Commercial Vehicle Insurance
  • Travel Insurance
  • Car Insurance Premium Calculator
  • Family Health Insurance
  • Senior Citizens Insurance
  • Group Insurance
  • Corona Rakshak Policy
  • Corona Kavach Policy
  • Super Topup Plan
  • Term Insurance
  • ULIP
  • e-Term Plan
  • 1 Cr Term Insurance
  • कार इन्शुरन्स
  • टू व्हीलर इंश्योरेंस
  • टर्म इंश्योरेंस
  • हेल्थ इंश्योरेंस
  • मेडिक्लेम पॉलिसी
  • Learn About Insurance
  • Network Hospitals
  • Cashless Garages
  • Get Android App
  • Learn
  • About Us
  • Contact Us
  • Careers
  • Sitemap
  • FAQs
Connect with us
Become a Partner
Become a Coverdrive POS Agent

Coverfox Insurance Broking Pvt. Ltd. : Unit D4131-4139, 4th floor, Oberoi Garden Estates, Near Chandivali Studio, Andheri East, Mumbai - 400072

Licence No. 478 , IRDA Direct Broker Code: IRDA/ DB 556/ 13 , Valid till: 26/12/2022, CIN: U66000MH2013PTC243810

  • Shipping & Delivery Policy
  • Privacy Policy
  • Cancellation & Refund
  • Terms & Conditions
Copyright © 2022 Coverfox.com. All Rights Reserved