GST on commercial property sale in India

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One of the most important economic sectors in any nation is real estate, particularly in India, where it has recently attracted attention. You will learn about the impact of GST on the real estate sector in this article. You will be specifically knowing about GST on Commercial Property.

Previous Legislation of Taxes on Commercial Property

Before the GST was implemented, landlords were required to register for service taxes. However, this was only relevant if the total tax on all of his or her properties surpassed Rs. 10 lakhs each year. Those who earned a net income from their rental business below this amount were exempt from signing up for the same.

Landlords of all types of commercial properties were compelled to pay a service tax if they rented out their premises. The use of residential homes as business properties is widespread. The same did not apply to residential homes, though.

The implication of GST on Rental Commercial Property

  • Any service that qualifies as commercial property rental is subject to GST taxes. GST, however, only applies to the following:
    • GST is applicable on all commercial rental revenue, whether it comes through a simple rental, an easement, a lease, or a “license to occupy.”
    • GST is charged on commercial real estate that has been rented out in India, and it also applies to industrial and residential real estate.

Present Scenario of GST on Real Estate

Residential homes are excluded from GST under the current rules. Any type of immovable property rented out for commercial purposes, however, would be subject to an 18% GST. GST has, however, made things simpler for landlords of commercial real estate.

Only revenue of Rs. 20 lakhs or more is now subject to the GST on commercial rental income. Accordingly, everyone who receives an income from commercial rent-outs of Rs. 20 lakh or more is required to do GST Return Filing on that income, while those who earn less do so with a further exemption of up to an additional Rs. 10 lac in earnings, as opposed to the previous legislation.

However, as per the recent updates from the Government now the rental residential homes are also liable to GST in some scenarios. Understand this at: Now pay 18% GST on residential rental property in India or contact our experts at: 8881-069-069.

TDS on GST on Commercial Property Rent

The amount of rent that the landlord collects is subject to the GST. Therefore, while creating the rental plan for their property, the landlord must account for the GST they would have to pay. When paying rent for a property worth more than Rs. 1.80 lakhs, the renter is required to deduct 10% income tax at the source. Both residential and commercial properties are subject to TDS. TDS is not subject to GST.

Rate of GST on Commercial Property in India

In India, the GST rate for commercial real estate is 18% of the taxable value, with rent being classified as a taxable service supply. However, if it is a religious or charitable trust, it is exempt from GST.

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