Houses on rent become expensive by 18%: If you live on rent, then understand the new rules of GST, who will have to pay tax and who will get an exemption

Posted on 16th Aug 2022 by rohit kumar

The people living on rent will have to pay GST or not, the government has made some rules regarding this. In the meeting held last month, several changes were made to the GST rules. These changes have come into effect from July 18.

 

Earlier a notification was issued on July 13. Then it was not clear among the people when and in which situation the tenant would have to pay GST.

 

Now we are telling you the answers to all the questions related to this. Let us know one by one...

 

Question: What is GST?

Answer: GST means Goods and Services Tax. In Hindi, it means- Goods and Services Tax. GST has to be paid on the purchase of any goods or purchase of any service. GST is applicable in India from 1st July 2017.

 

Question: It is being claimed in many media reports that all tenants will have to pay 18% GST on house rent, that is, while living in rent, is this true?

Answer: The fact-checking arm of PIB i.e. Press Information Bureau has made a tweet regarding this matter. It states that such reports are false. An attempt is being made to mislead people through this, but in some situations, the tenants will have to pay GST.

 

Question: If the landlord is not GST registered and gives his house on rent to a GST registered one, what does the rule say?

Answer: According to the new rules, if an unregistered person i.e. a job worker or a small businessman gives his house under GST to a registered person (say a company), then GST will be charged on the rent. This means that under the reverse mechanism, the tenant will have to pay 18 percent GST on the rent.

 

Note: As per tax rules, a person does not mean just any person, but it is a broader term and it includes companies as well as all legal entities.

 

In many cases, it has been seen that people with even lesser turnover have done GST registration. This is because it allows their clients or customers to claim an input tax credit in the supply chain.

 

Now you must be wondering what is this input tax credit. Let's understand this too. Input Tax Credit in GST refers to a system in which you get credit instead of the GST paid somewhere earlier.

 

That is, even if you need to pay GST later, you can use these credits instead of money. With the help of these credits, the tax is reduced. You do not have to bear the burden of paying taxes again and again on the business of one product.

 

Question: If both the landlord and the tenant are not GST registered, then this rule of GST will be applicable on rent or not?

Answer: In this case, the new rule of GST on rent will not be applicable.

 

Question: If a company rents a flat for one of its employees and the landlord is not GST registered, then what GST will have to be paid?

Answer: If the employee lives in a rented flat and the company does not pay his entire rent, then the rent will not attract GST.

 

while going

 

In the new rule, on which things other than rent, GST is applicable-

 

Prepackaged, labeled cereals, pulses, and flour have been brought under the purview of GST for the first time. No GST will be levied on their sale in the open.

 

Decorations, bands, photo videos, wedding cards, horse-drawn carriages, beauty parlors, and lighting also attract 18% GST.

 

5 to 12 percent GST is levied on clothes and footwear purchased for weddings.

 

Gold jewelry attracts 3% GST. 6 thousand rupees will have to be paid as GST on the purchase of jewelry worth 3 lakhs.

 

Bus-taxi service also attracts 5% GST.

 

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