Fact-check: Will tenants have to pay 18% GST on house rent? Government clarifies
The Press Information Bureau's fact-checking division tweeted that stories alleging 18 per cent GST on housing rent for tenants are misleading. Only when a residential unit is rented to a commercial entity is the rent taxed.
The government's official fact-checker today responded to social media posts alleging that tenants would now have to pay 18 per cent Goods and Services Tax (GST) on housing rent, saying such assertions were false.
When a home is rented to a private individual for personal use, there is no GST, according to PIB Fact Check's clarification on Twitter. Additionally, GST would not be applicable if a business's owner or partner rented a home for personal use.
However, renting the residential unit will become taxable if the property is rented to a business entity.
"Renting of residential unit taxable only when it is rented to a business entity. No GST when it is rented to a private person for personal use. No GST even if proprietor or partner of firm rents residence for personal use," PIB Fact Check tweeted from its official handle.
The exemption on renting residential properties to business companies was eliminated during the 47th GST Council meeting in June 2022.
A salaried individual who rents a home for personal use is exempt from paying GST on rent under the new regulation.
According to experts, the government's clarification on the GST on rent is much-needed since it would stop unwarranted concerns. Additionally, the clarification offers an exemption to proprietors or partners in GST-registered businesses who rent out residential premises for their own use.
"This is welcome clarification by the Government that will prevent unnecessary panic where people were under the false belief that residential renting of immovable property to unregistered persons would also attract GST," Abhishek Jain, Partner, Indirect Tax at KPMG in India, told in a statement released to the media.
"More importantly, this clarification provides the much-needed relief to GST-registered proprietors or partners in GST-registered firms who take on rent immovable property for their personal use, e.g. renting of a house for family accommodation, in which case the Government has rightly clarified that GST will not be applicable," he added.
On July 18, the new GST rule came into force.