GST on residential rent to depress the demand for rental accommodation
According to real estate experts, the Goods and Services Tax on residential projects may cause a slight decline in housing demand or apartment prices, but the market may eventually adjust to the new tax laws. Since July 18, residential rents have been covered by the Internet of Goods and Services Act. Tenants may also be required to pay GST using a different rate structure than the government.
Before until recently, the GST was only applicable to purchases of under-production properties, such as homes, builder floors, villas, and bungalows. However, GST is no longer applicable for the purchase of buildable plots and ready-to-move-in homes with occupancy certificates. The GST Council decided to bring residential leases under the GST’s purview starting on July 18, 2022, during its meeting on July 13, 2022. The previous announcement from June 2017 was modified to include residential properties rented to registered people and businesses inside GST, with a tax rate of less than 18 percent. Lessees are now responsible for making the tax payments instead of the lessor.
No one will be required to pay 18 percent GST if they live in a rental apartment and don’t have a registered GST range. However, the tenant is responsible for paying the GST if a business with a GST range leases to private people. Furthermore, the lessee (occupant) must pay the GST to the authorities’ credit following the Reverse Charge Mechanism.
There are some areas where notification is no longer clear at all. It is unclear whether or not a builder will still be required to pay the GST if they continue to provide rented housing to tenants of redevelopment projects. Similar to this, a person operating a sole proprietorship with a GST range may rent an apartment for personal use, but the tax authorities may regard this as falling below the 18 percent taxable GST. Due to their inability to afford to buy the homes, middle-class tenants no longer view leased housing as a nice service but rather as a necessity. Indians with middle-class salaries who are unable to afford to buy a home are burdened by it (the new rule). Now, being able to afford a leased home as well is opulent.
Disclaimer: The views expressed above are for informational purposes only based on industry reports and related news stories. PropertyPistol does not guarantee the accuracy, completeness, or reliability of the information and shall not be held responsible for any action taken based on the published information.
