GST: Understanding how the rules around tax on rent will apply to tenants

Businesses with a turnover of less than Rs 40 lakh per annum and salaried individuals are not required to pay the GST on rent under the new rules

Under the new goods and services tax (GST) rules, which came into effect on Monday, a tax of 18 per cent is now applicable to residential property rent. The tax will be charged according to the reverse charge mechanism (RCM), where the tenant will be liable to pay the GST.

However, it must be clarified that the salaried individuals, who have taken home on rent or lease, will not be required to pay any such tax. The new rule only applies if the person/ company has completed the GST registration.

What is GST registration?

According to the rules, if