GST & TAXATION
GST ON RENTAL INCOME:CGST/SGST GUIDE
Advocate Iranpreet Singh
January 18, 2025
16 min read
GST on rental income has specific rules for applicability, exemptions, and CGST/SGST breakdown. This comprehensive guide clarifies when GST applies to rental income, exemption thresholds, and compliance requirements for property owners.
TABLE OF CONTENTS
RENTAL INCOME OVERVIEW
UNDERSTANDING GST ON RENTAL INCOME
GST on rental income applies to specific types of property rentals under the Goods and Services Tax regime. Understanding when GST is applicable, exemption limits, and compliance requirements is crucial for property owners.
Key Aspects of GST on Rental Income
GST Applicability:
- Commercial property rentals
- Furnished residential rentals
- Industrial property rentals
- Rental above exemption threshold
GST Exemptions:
- Residential property rentals
- Rental below ₹20 lakh annually
- Agricultural land rentals
- Government property rentals
🏢 Commercial Rentals
Office spaces
Retail shops
Warehouses
18% GST applicable
🏠 Residential Rentals
Unfurnished houses
Apartments
Independent houses
Generally exempt
🏭 Industrial Rentals
Factory premises
Manufacturing units
Industrial plots
18% GST applicable
GST APPLICABILITY
WHEN GST APPLIES TO RENTAL INCOME
GST applicability on rental income depends on the type of property, nature of rental, annual rental value, and specific exemptions under the GST law.
📋 GST Applicability Criteria
Taxable Rental Services:
- Commercial Properties: Offices, shops, showrooms
- Industrial Properties: Factories, warehouses, godowns
- Furnished Accommodation: Serviced apartments, guest houses
- Event Venues: Banquet halls, conference centers
Exempt Rental Services:
- Residential Properties: Houses, apartments for living
- Agricultural Land: Farmland, agricultural plots
- Government Properties: Public sector rentals
- Below Threshold: Annual rental below ₹20 lakh
🏗️ Property Type Classification
| Property Type | GST Applicability | GST Rate | Conditions |
|---|---|---|---|
| Commercial Office | Yes | 18% | Above ₹20 lakh annually |
| Retail Shop | Yes | 18% | Above ₹20 lakh annually |
| Warehouse/Godown | Yes | 18% | Above ₹20 lakh annually |
| Residential House | No | Exempt | For residential purpose |
| Furnished Apartment | Yes | 18% | If furnished accommodation |
| Agricultural Land | No | Exempt | Agricultural activities only |
🔍 Key Determining Factors
Purpose of Use
- • Commercial vs residential use
- • Business activities conducted
- • Nature of occupation
- • Tenant's business registration
Annual Rental Value
- • ₹20 lakh threshold limit
- • Aggregate rental income
- • Multiple property calculation
- • Financial year basis
Property Features
- • Furnished vs unfurnished
- • Additional services provided
- • Maintenance and utilities
- • Location and zoning
CGST/SGST BREAKDOWN
UNDERSTANDING CGST AND SGST ON RENTALS
📊 GST Rate Structure
18% GST Breakdown on Rental Income
9%
CGST (Central GST)
Collected by Central Government
9%
SGST (State GST)
Collected by State Government
18%
Total GST
Combined CGST + SGST
Inter-State vs Intra-State Rentals
Intra-State Rental (Same State):
- • CGST: 9% (to Central Government)
- • SGST: 9% (to State Government)
- • Total: 18% GST
- • Example: Delhi property rented to Delhi tenant
Inter-State Rental (Different States):
- • IGST: 18% (to Central Government)
- • No CGST/SGST applicable
- • Total: 18% GST
- • Example: Delhi property rented to Haryana company
💰 Calculation Examples
Example 1: Commercial Office Rental (Intra-State)
Rental Details:
- • Monthly rent: ₹2,00,000
- • Annual rent: ₹24,00,000
- • Property: Commercial office in Gurgaon
- • Tenant: Company registered in Haryana
GST Calculation:
- • CGST (9%): ₹18,000 per month
- • SGST (9%): ₹18,000 per month
- • Total GST: ₹36,000 per month
- • Annual GST: ₹4,32,000
Example 2: Warehouse Rental (Inter-State)
Rental Details:
- • Monthly rent: ₹1,50,000
- • Annual rent: ₹18,00,000
- • Property: Warehouse in Punjab
- • Tenant: Company registered in Delhi
GST Calculation:
- • IGST (18%): ₹27,000 per month
- • No CGST/SGST applicable
- • Total GST: ₹27,000 per month
- • Annual GST: ₹3,24,000
EXEMPTIONS & THRESHOLDS
GST EXEMPTIONS AND THRESHOLD LIMITS
🚫 Complete Exemptions
Residential Property Exemptions:
- Unfurnished residential houses and apartments
- Independent houses for residential purpose
- Residential flats in housing societies
- Hostels and dormitories (educational)
Other Exemptions:
- Agricultural land for farming activities
- Government property rentals
- Religious and charitable institution properties
- Educational institution premises
💰 Threshold Limits
₹20 Lakh Annual Threshold
Exemption Criteria:
- • Annual rental income below ₹20 lakh
- • Aggregate of all rental properties
- • Financial year basis calculation
- • Applicable to commercial rentals
Calculation Method:
- • Include all rental income sources
- • Exclude residential property rentals
- • Consider advance rent received
- • Monthly monitoring required
Threshold Breach Implications
Registration Required:
- • GST registration mandatory
- • Within 30 days of breach
- • Retrospective tax liability
- • Penalty for late registration
Tax Liability:
- • 18% GST on entire rental
- • From the date of breach
- • Monthly return filing
- • Input tax credit available
Compliance:
- • Monthly GST returns
- • Annual return filing
- • Invoice generation required
- • Record maintenance
🔍 Special Cases
Furnished Accommodation:
- Serviced apartments with housekeeping
- Guest houses with meal services
- Corporate accommodation packages
- 18% GST applicable regardless of amount
Mixed-Use Properties:
- Residential cum commercial properties
- Proportionate GST calculation
- Separate billing for different uses
- Documentation of usage required
REGISTRATION REQUIREMENTS
GST REGISTRATION FOR RENTAL INCOME
📋 Registration Criteria
Mandatory Registration:
- Annual rental income exceeds ₹20 lakh
- Inter-state rental transactions
- Furnished accommodation services
- Commercial property rentals above threshold
Voluntary Registration:
- Below threshold but wants ITC benefits
- Business expansion planning
- Corporate tenant requirements
- Professional image enhancement
📄 Required Documents
Identity Documents
- • PAN card of property owner
- • Aadhaar card copy
- • Passport size photographs
- • Bank account details
Property Documents
- • Property ownership documents
- • Rental agreements
- • Property tax receipts
- • Municipal approvals
Business Documents
- • Business registration (if applicable)
- • Address proof of business
- • Authorized signatory details
- • Digital signature certificate
COMPLIANCE OBLIGATIONS
GST COMPLIANCE FOR RENTAL INCOME
📊 Return Filing Requirements
Monthly Returns
- • GSTR-1: Outward supplies
- • GSTR-3B: Summary return
- • Due dates: 11th & 20th
- • Late fees for delays
Annual Returns
- • GSTR-9: Annual return
- • GSTR-9C: Audit report (if applicable)
- • Due date: 31st December
- • Reconciliation required
Payment Requirements
- • Monthly GST payment
- • Electronic payment mandatory
- • Interest on delayed payments
- • Penalty for non-payment
💳 Invoice Requirements
Mandatory Invoice Details
Basic Information:
- • Invoice number and date
- • GSTIN of landlord and tenant
- • Property address and description
- • Rental period covered
Tax Details:
- • HSN/SAC code (997212)
- • Taxable value of rent
- • CGST/SGST or IGST breakdown
- • Total amount including GST
PRACTICAL SCENARIOS
REAL-WORLD APPLICATIONS
💼 Case Studies
Scenario 1: Small Commercial Property Owner
Property Details:
- • 2 shops in local market
- • Monthly rent: ₹15,000 each
- • Annual rental: ₹3,60,000
- • Location: Same state as owner
GST Implications:
- • Below ₹20 lakh threshold
- • No GST registration required
- • No GST to be charged
- • GST Liability: Nil
Scenario 2: Large Commercial Complex Owner
Property Details:
- • Commercial complex with 10 units
- • Average rent: ₹50,000 per unit
- • Annual rental: ₹60,00,000
- • Mixed local and outstation tenants
GST Implications:
- • Above ₹20 lakh threshold
- • GST registration mandatory
- • 18% GST on all rentals
- • Annual GST: ₹10,80,000
Scenario 3: Mixed Residential-Commercial Property
Property Details:
- • Ground floor: Commercial (₹40,000/month)
- • Upper floors: Residential (₹25,000/month)
- • Annual commercial: ₹4,80,000
- • Annual residential: ₹3,00,000
GST Implications:
- • Commercial portion: Below threshold
- • Residential portion: Exempt
- • No GST registration required
- • GST Liability: Nil
BEST PRACTICES
RENTAL INCOME GST BEST PRACTICES
Documentation
- • Maintain detailed rental agreements
- • Proper invoice generation and records
- • Separate accounting for different properties
- • Regular monitoring of threshold limits
Compliance Management
- • Timely GST return filing
- • Regular payment of GST dues
- • Professional consultation for complex cases
- • Stay updated with GST law changes
Tax Planning
- • Structure rentals to optimize GST liability
- • Consider voluntary registration benefits
- • Plan for input tax credit utilization
- • Review rental agreements periodically
Risk Management
- • Regular compliance audits
- • Proper classification of rental types
- • Maintain backup documentation
- • Legal support for disputes
GET PROFESSIONAL HELP
Rental Income GST Planning
Strategic GST planning for rental income optimization
GST Registration & Compliance
Complete assistance with GST registration and ongoing compliance
Legal Disputes
Representation in GST disputes and assessments
Contact Advocate Iranpreet Singh
Expert GST Legal Advice for Rental Income
📞+91-XXXXX-XXXXX
📧contact@iranpreetsingh.com
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