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| - Fact Check: No, 18% GST on house rent is NOT applicable to all tenants
The 18 per cent GST levied on house rent is not meant for all. It is only applicable to companies or individuals that are registered under GST.
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India Today Fact Check
The GST council has indeed levied a GST on house rent. But this 18 per cent tax is not meant for all. It is only applicable to companies or individuals that are registered under GST.
If social media posts are to be believed, one now has to pay a Goods and Service Tax even for renting a house. One such post claims, “Modi promised in 2018 - Every Indian will have a house by 2022. Modi delivered in 2022 - 18% GST on house rent.”
Modi promised in 2018 - Every Indian will have a house by 2022.
Modi delivered in 2022 - 18% GST on house rent. — Sanghamitra (@AudaciousQuest_) August 12, 2022
AFWA’s investigation found that GST on house rent is not applicable for all. It is only meant for those tenants — business firms or individuals — who are registered under GST.
Is there really a tax on renting houses?
The short answer is yes. But this tax does not apply to everyone.
While investigating the claim, we found a detailed report on GST on house rent in the Business Standard. It states that under the new system, 18 per cent GST will be charged on house rent under the reverse charge mechanism (RCM), where the tenant will be liable to pay it.
However, the report clarified that salaried individuals need not pay any such tax. The new rule only applies if the person/company has completed GST registration.
What’s more? The report further states that if neither tenant nor landlord is not registered under GST, there is no legal obligation to pay any tax on the rent.
Archit Gupta, founder and CEO at ClearTax, explained to the media: "If any common salaried person has taken a residential house or flat on rent or lease, they do not have to pay GST. However, a GST-registered person who carries out business or profession must incur 18 per cent GST on such rent paid to the owner.”
To further confirm the claim, we tried to look for a government report that supported this media report. We found a press release from the PIB on the recommendations of the recently concluded 47th GST Council Meeting. The press release was published on June 29, 2022.
This press release states that the council has withdrawn the exemption on a few services. One such service is renting residential dwellings to business entities (registered persons).
In fact, the PIB also debunked the viral claim about tax on renting houses.
Claim: 18% GST on house rent for tenants #PibFactCheck
Renting of residential unit taxable only when it is rented to business entity
No GST when it is rented to private person for personal use
No GST even if proprietor or partner of firm rents residence for personal use pic.twitter.com/3ncVSjkKxP — PIB Fact Check (@PIBFactCheck) August 12, 2022
Hence, we concluded that this viral claim was misleading. While the GST council has indeed levied a tax on house rent, this 18 per cent tax is not meant for all. It is only for companies or individuals that have completed GST registration.
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