G.S.R. 625(E).— In exercise of the powers conferred by sub-section (3) of section 5 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017), the Central Government, on the recommendations of the Council, hereby makes the following further amendments in the notification of the Government of India, in the Ministry of Finance (Department of Revenue), No.10/2017 – Integrated Tax (Rate), dated the 28th June, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 685(E), dated the 28th June, 2017, namely:
- In the said notification, in the Table, after serial number 6AA and the entries relating thereto, the following serial number and entries relating thereto in columns (2), (3), and (4) shall be inserted, namely:
| (1) | (2) | (3) | (4) |
|---|---|---|---|
| 6AB | Service by way of renting of any property other than residential dwelling. | Any unregistered person | Any registered person |
- This notification shall come into force with effect from the 10th October, 2024.
Note: The principal notification no. 10/2017 – Integrated Tax (Rate), dated the 28th June, 2017 was published in the Gazette of India, Extraordinary, vide number G.S.R. 685(E), dated the 28th June, 2017 and was last amended vide notification no. 14/2023 – Integrated Tax (Rate), dated the 19th October, 2023, published in the official gazette vide number G.S.R. 766(E), dated the 19th October, 2023.
Scenario:
Mr. Ramesh owns a commercial property in Mumbai. He has rented out this property to a company for office use (non-residential). The company is a registered taxpayer under GST, while Mr. Ramesh himself is an unregistered person, as his turnover does not exceed the GST registration threshold.
Key facts from Notification:
- As per the amendment introduced by Notification No. 09/2024, effective from October 10, 2024, services by way of renting of non-residential properties provided by any person (whether registered or unregistered) are now subject to GST.
- The notification specifically clarifies that these services provided to either registered or unregistered recipients are covered under this tax amendment.
Application of the Notification:
- Service Description: Mr. Ramesh provides the service of renting out commercial property (non-residential dwelling) to a company.
- Unregistered Provider: Mr. Ramesh, being unregistered under GST, falls within the scope of this notification. Even though he is unregistered, his service is now taxable under GST.
- Registered Recipient: The company leasing the property is a registered GST entity. Therefore, the company is required to pay GST under the reverse charge mechanism (RCM) since the service provider (Mr. Ramesh) is unregistered.
Tax Implications:
- The company will be responsible for paying the GST on the rent payments to Mr. Ramesh under the reverse charge mechanism.
- The company can claim input tax credit (ITC) on the GST paid, subject to usual eligibility rules.
Example of Computation:
- Monthly Rent: ₹50,000
- Applicable GST rate: 18%
The company will pay GST = ₹50,000 × 18% = ₹9,000, which is deposited with the government under the reverse charge mechanism. The company can later claim an input tax credit of ₹9,000 against their output GST liability.
This illustration shows how even unregistered property owners providing commercial rental services are impacted by this notification and how the recipient of the service must handle the GST compliance through reverse charge.
