Co-owners of jointly owned property can individually claim GST exemption for small businesses under Section 22.

The Authority for Advance Rulings in Kerala clarified that co-owners of jointly owned property can avail the small business exemption under Section 22 of the GST Act individually, even when rent is collected jointly but distributed equally among them. Engaging a co-owner for rent collection and distribution among all owners does not affect the eligibility for the business exemption under Section 22 for individual co-owners. Each co-owner's liability to register under the GST Act arises only if their individual receipts exceed the threshold limit.

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Issues involved:
1. Availability of small business exemption under Section 22 of the GST Act to co-owners of jointly owned property.
2. Implication of engaging a co-owner to collect and distribute rent among all owners on the business exemption under Section 22 of the GST Act for individual co-owners.

Analysis:

Issue 1: Availability of small business exemption under Section 22 of the GST Act to co-owners of jointly owned property:
The petitioner, a co-owner of a jointly owned immovable property, sought an advance ruling on whether the small business exemption under Section 22 of the GST Act is available to all owners separately in the case of jointly owned property. The authorized representative argued that under the GST scenario, renting of immovable property is considered a service attracting 18% GST. However, Section 22 of the GST Act exempts a supplier from registration if their aggregate turnover does not exceed Rs. 20 Lakhs in a financial year. The representative highlighted that in cases of jointly owned properties, each joint owner is assessed separately for their share under the Income Tax Act, making them eligible for individual exemptions. The rent collected from the joint property was distributed equally among the co-owners, with each co-owner receiving an income below the GST threshold limit.

Issue 2: Implication of engaging a co-owner to collect and distribute rent among all owners on the business exemption under Section 22 of the GST Act for individual co-owners:
The ruling clarified that a co-owner holding immovable property jointly with others and receiving lease rent in proportion to their share is eligible for the benefit of the threshold exemption under the GST Act. It was emphasized that the clubbing of rent amounts received by each co-owner, based on their share in jointly owned rented property, is not permissible. The ruling confirmed that engaging a co-owner to collect and distribute rent among all owners for administrative convenience does not affect the business exemption under Section 22 of the GST Act for individual co-owners. Each co-owner's liability to register under the GST Act arises only if their individual receipts from all businesses, including renting of immovable property, exceed Rs. 20 Lakhs in a financial year.

In conclusion, the Authority for Advance Rulings in Kerala issued rulings stating that the small business exemption under Section 22 of the GST Act is available to co-owners separately in the case of jointly owned property where rent is collected together but divided equally among the respective co-owners. Furthermore, engaging a co-owner for rent collection and distribution among all owners for administrative convenience does not impact the business exemption eligibility for individual co-owners under Section 22 of the GST Act.

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