GST on renting of Immovable Property

Renting of Residential Immovable Property

For commercial use:

The CGST Act, 2017 provides for certain activities to be treated as supply of goods or supply of services and Section 7 which defines the scope of expression “supply” provides that that activities specified in the said Schedule II would also be covered within the scope of “supply”.

Clause 2(b) in Schedule II of the Act states that any lease or letting out of the building including a commercial, industrial or residential complex for business or commerce, either wholly or partly, is a supply of services.

Therefore, as per the above clause, renting of residential dwelling for commercial use is a service and thus will be liable for taxation under GST at 18%.

For residential use:

Service Tax Exemption of services by way of renting of residential dwelling for use as residence will continue to be exempt in GST as decided by the GST Council.

Renting of Commercial Immovable Property

Renting of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes having room tariff Rs.1000 and above but less than Rs.2500 per room per day are taxable under GST at 12% with full ITC.

Renting of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes where room tariff of Rs 2500/ and above but less than Rs 7500/- per room per day are taxable under GST at 18% with full ITC.

Accommodation in hotels including 5 star and above rated hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes, where room rent is Rs 7500/- and above per night per room are taxable at 28% with full ITC. 

Bundled service by way of supply of food or any other article of human consumption or any drink, in a premises (including hotel, convention center, club, pandal, shamiana or any other place, specially arranged for organizing a function) together with renting of such premises are taxable at 18% with full ITC.