Fact-Check: Not All Tenants Have To Pay 18 Percent GST on House Rent

Only GST-registered persons, who offer services from a rented residential property, will be liable to pay this tax.

Claims falsely  state that all tenants will be liable to pay 18 percent GST on rented residential properties.

(Source: Twitter/Altered by The Quint)

Several social media users are sharing posts to claim that tenants will now be charged 18 percent Goods and Services Tax (GST), under the new revised rates after the 47th meeting of the GST council.

The posts claim all people renting houses will be liable to pay 18 percent GST on house rent.

However, the claim is misleading. As per reports, only individuals who have registered themselves as businesses under GST will be liable to the 18 percent tax, which they can claim deductions under Input Tax Credit while filing for GST returns, under the reverse charge mechanism (RCM).

Moreover, this tax will only be applicable to GST-registered tenants who offer services from the rented residential property, and will not incur the tax if the house is used for residential purposes.

CLAIM

Several social media users, including Trinamool Congress national spokesperson Saket Gokhale, claimed that all tenants would be charged 18 percent GST on house rent under the revised tax rates.

An archive of this post can be seen here.

(Source: Twitter/Screenshot)

Archives of more posts with similar claims can be seen here, here, and here.

WHAT WE FOUND OUT

We looked up the claim for more details regarding the tax and its implementation, and came across an NDTV report regarding the same.

The report stated that only GST-registered individuals – not all tenants – would incur the tax. It added that the tax would be incurred on the rent paid to the owner, who would not be taxed in this manner on their owned property.

Further, it stated that a GST-registered individual who offers their services from the rented residential property will have to pay GST at the 18 percent rate.

As per a PTI report, the government clarified that the tax would only be applicable for GST-registered individuals who were working out of their rented residential properties.

It said that no GST would be applicable when a residential property was "rented to private person for personal use," adding that even a proprietor or partner of a firm would not have to pay this tax if they rented "residence for personal use."

Additionally, the press release issued by the the Central Board of Excise and Customs after the 47th meeting of the GST council also states that it would now charge taxes for "renting of residential dwelling to business entities (registered persons)."

The document notes that only business entities would be liable to pay the tax.

(Source: CBIC/Altered by The Quint)

Explaining the change, Archit Gupta, Founder and CEO at Clear told Mint that if a salaried person has taken up a house/flat on rent then they will need to pay GST. But a GST-registered person who carries out business will be liable to pay the tax.

Clearly, only GST-registered individuals who offer services from a rented residential property will be liable to pay 18 percent GST on their house rent.

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