Amendment :Ref. Notification No. 04/2022-CT(R) & 05/2022-CT(R) dated 13.07.2022.
Notification 4 makes an amendment in Master Notification No. 12/2017-CT(R) by which against serial no. 12 in column (3) after the words “as residence” the words “except where the residential dwelling is rented to a registered person” shall be inserted.
Clarification:
If any person gives his residential dwelling (place to live, house) for rent to any registered person for residential use then such renting services would now be taxable and hence exemption has been withdrawn if Residential dwelling is given to registered person.
If Residential Dwelling is given on rent to an unregistered person then it will continue to be exempt service.
RCM EFFECT
Further, Notification No. 05/2022-CT(R) has inserted entry no. 5AA which says, “Services by way of renting of residential dwelling to a registered person” will be liable for levy of GST on Reverse Charge and Registered Person taking such renting services would be liable to pay tax on RCM. Here no restriction on purpose of use of such residential dwelling has been mentioned, i.e. even if the said residential dwelling is used for commercial purposes then also RCM liability will be there.
Impact
All those Registered Person who took Residential Dwelling on Rent from unregistered person, would have to pay GST on RCM and if used for residential purposes then will have to check eligibility of ITC.
A Lot of GST Collection would be seen and a lot of due diligence during Income Tax Return filing will have to be done
