Renting of residential dwelling for the purpose of residence was earlier exempted. However, the exemption on such service has been withdrawn with effect from 18.07.2022.
Now onwards renting of residential property for the purpose of residence is also taxable if the recipient of service is registered under GST.
Prior to July 18th,2022 Services by way of renting of residential dwelling for use as residence was exempted.
After July 18th ,2022 Services by way of renting of residential dwelling for use as a residence except where the residential dwelling is rented to unregistered person.
Changes after July 18th is as below:
“Except where the residential property is rented to a registered person”.
As a result of such amendment, if the residential property is rented to a registered person even if for the purpose of residence, it is chargeable to GST.
Taxability of renting of residential dwelling for the purpose of residence Under RCM
Added a new entry as 5A in the said notification which states that, Service by way of renting of a residential dwelling to a registered person will cover into the RCM.
Different scenario to cover taxability situation is given in the below table:
| Service Supplier | Service Receiver | purpose | Taxable/Exempt | RCM/FCM |
| Registered person | Registered Person | Residential purpose | Taxable | RCM |
| Registered person | Registered Person | Commercial Purpose | Taxable | RCM |
| Registered person | Un-Registered Person | Residential Purpose | Exempt | – |
| Registered person | Un-Registered Person | Commercial Purpose | Taxable | FCM |
| Un-registered person | Registered Person | Residential Purpose | Taxable | RCM |
| Un-registered person | Registered Person | Commercial Purpose | Taxable | RCM |
| Un-registered person | Un-Registered Person | Residential Purpose | Exempt | – |
| Un-registered person | Un-Registered Person | Commercial Purpose | Exempt | – |
Conclusion:
- If the residential dwelling is rented to a registered person for the purpose of residence, then it is taxable, and the recipient of such service will pay tax on such on RCM.
- If the residential dwelling is rented to an unregistered person for the purpose of residence, then it will be exempt.
- SAC for renting residential dwelling would be 997211 i.e., “Rental or leasing services involving own or leased residential property”.
- The applicable rate of tax would be 18%, either for payment of tax under forward charge or reverse charge.
Disclaimer: This article is only a knowledge-sharing initiative and is based on the Relevant Provisions as applicable and as per the information existing at the time of the preparation. In no event, RMPS & Co. or the Author or any other persons be liable for any direct and indirect result from this Article or any inadvertent omission of the provisions, update, etc if any.
Published on: August 24, 2022