Considering renting a home? Will you be required to pay 18% GST? The government clarifies

18% GST on house rent for tenants: How the government responded to misleading social media posts

Controversy over the 18% GST on house rent for tenants: In response to social media posts claiming that tenants would now be required to pay 18% Goods and Services Tax (GST) on house rent, the Government’s official fact-checker today stated that such claims were false.

On Twitter, PIB Fact Check clarified that when a house is rented to a private person for personal use, there is no GST. GST would also not apply if a company’s owner or partner rented a home for personal reasons.

Only when a residential unit is rented to a business entity is it taxable. There is no GST when it is rented to a private individual for personal use. “There is no GST if the proprietor or partner of the firm rents a residence for personal use,” PIB Fact Check tweeted from its official account.

The exemption on renting residential dwellings to business entities was repealed at the 47th GST Council meeting in June 2022. (registered persons).

A salaried person does not have to pay GST on rent if he or she rents a house for personal use, according to the new rule.

Thank you for clarifying.

According to experts, this is a welcome clarification from the government because it will avoid unnecessary panic over GST on house rent. Furthermore, the clarification exempts GST-registered proprietors or partners in GST-registered firms who rent out residential properties for personal use.

“This is a welcome clarification by the government that will prevent unnecessary panic among those who were mistakenly under the impression that residential renting of immovable property to unregistered persons would also be subject to GST.” More importantly, this clarification provides much-needed relief to GST-registered proprietors or partners in GST-registered firms who take on rent immovable property for their personal use, such as renting a house for family accommodation, in which case the Government has rightly clarified that GST will not be applicable,” said Abhishek Jain, Partner, Indirect Tax at KPMG in India, in a statement shared with the media.

The new GST rule went into effect on July 18.

The Council also suggested that hotel accommodations priced up to 1,000 per day be taxed at 12%. Furthermore, the GST on room rent (excluding ICU) charged by a hospital that exceeds Rs 5000 per day per patient was capped at 5%. “Room rent (excluding ICU) exceeding Rs 5000 per day per patient charged by a hospital shall be taxed at 5% without ITC to the extent of the amount charged for the room,” the Ministry of Finance said in a statement.

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