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Residential property leased for commercial use subject to 18% IGST The Authority ruled that the service provided by the applicant, involving leasing a residential building for commercial purposes, was taxable at 18% IGST ...
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Provisions expressly mentioned in the judgment/order text.
Residential property leased for commercial use subject to 18% IGST
The Authority ruled that the service provided by the applicant, involving leasing a residential building for commercial purposes, was taxable at 18% IGST under SAC 997212. The exemption under SI.No.13 of Notification No. 9/2017 was denied due to the commercial nature of the activity, as the lessee offered boarding and hospitality services in addition to room rentals, indicating non-residential property usage.
Issues: 1. Eligibility for GST exemption on monthly rentals for lease of residential building. 2. Interpretation of exemption notification SI.No.13 of Notification No. 9/2017.
Eligibility for GST exemption on monthly rentals for lease of residential building: The applicant sought an advance ruling on whether she is eligible for GST exemption on monthly rentals received for leasing her residential building in Telangana. The applicant claimed exemption under SI.No.13 of Notification No. 9/2017, which pertains to services by way of renting residential dwellings for use as residence. The applicant contended that the conditions for exemption were met, as the service was for renting a residential dwelling for residential purposes.
Interpretation of exemption notification SI.No.13 of Notification No. 9/2017: The Authority examined the lease agreement between the applicant and the lessee, D-Twelve Spaces Private Limited. It was noted that the lessee had the right to sub-lease the property for long-stay accommodation. However, upon further examination of the lease agreement and related documents, it was found that besides renting out rooms, the lessee provided food and hospitality services to the inmates, indicating a commercial activity. The Authority concluded that the building was used for commercial purposes, classifying the service under "Rental or leasing services involving own or leased non-residential property," taxable at 18% IGST.
Conclusion: The Authority ruled that the service provided by the applicant was classified under SAC 997212, liable for IGST at 18%, and not eligible for the exemption under SI.No.13 of Notification No. 9/2017. The ruling was based on the commercial nature of the activity, where the lessee provided boarding and hospitality services along with room rentals, indicating a non-residential property usage.
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