From 10th October 2024, a new GST regulation is in effect under the Reverse Charge Mechanism (RCM) for non-residential property rentals.
Here’s what you need to know:
1. Key Change:
Under the new rule, tenants renting non-residential properties from unregistered landlords will now be responsible for paying 18% GST directly to the government.
2. Why This Matters
This change is designed to:
-Broaden the tax net by capturing transactions that might otherwise go untaxed.
-Ensure that all commercial rental income, regardless of the landlord’s GST status, is taxed.
3. Example Scenario
If a GST-registered company leases office space from an unregistered individual, the company (tenant) must pay the 18% GST directly to the government instead of the landlord. This ensures that the tax burden is collected effectively.
4. What Tenants Should Do
-Review your rental agreements and check the GST status of your landlords.
-Ensure timely GST payments to avoid penalties.
-Claim the Input Tax Credit for above GST paid
-Stay compliant with these new provisions to avoid unexpected liabilities.
Stay updated, stay compliant, and make sure your business is ready for these changes!
Ambiguity in the notification: The notification says, "Services by way of renting of 'any property' other than residential dwelling." Does this include any other movable property as well like Machinery? What are your thoughts; comment below!
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