GST on Notional rent

[Kamalakara kS]

Industrial building given on lease basis . Lease amount is ₹ 600 lacks interest free deposit which is refundable after the expiry period of 6 years . No monthly rent . How valuation of rental income for the purposes of GST payment . How GST invoice to be issued. How tenant take GST credit as he is not paying monthly rent .

[Rajagopalan Ranganathan]

Sir,

According to Section 7 (1) (a) of CGST Act, 2017 " the expression “supply” includes all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business."

Normally whatever amount you earn by investing ₹ 600 lakhs will be treated as deemed rent and on this amount you have to pay gst. However you seek the assistance of a Cost Accountant to calculate the deemed rent accrued to you.

[Himansu Sekhar]

Open market value,

[DR.MARIAPPAN GOVINDARAJAN]

I endorse the views of Shri Ranganathan.

[Himansu Sekhar]

There is no scope of credit as you are not raising any invoice . valuation will be done as per valuation rules.

[Kamalakara kS]

Thanks to all ,but question is how tenant can take credit on notional rent . The land lard will pay GST on market value of rent , How Invoice to be raised. in case land lard issues a invoice ,can tenant can take credit as he is not accounting notional rent in his books of accounts

[Nash Industries I Pvt Ltd]

Dear Sir,

Treat as advance. Prepare Receipt Voucher and charge GST. When the Amount is returned, prepare Refund Voucher and the tax is refunded.

No credit is allowed.

Regards

S.Ramaswamy

AI Summary

GST on notional rent: liability arises on deemed rental value; input tax credit generally unavailable without invoiced rent.
GST applies to arrangements where an interest free refundable deposit substitutes for periodic rent: such transactions are supply and taxable on a deemed rental value determined by market valuation rules. The landlord should document and account GST on the deemed rent; pragmatically amounts may be treated as advances with receipt vouchers charging GST and refund vouchers on repayment. Input tax credit for the tenant will generally not be available absent invoicing and corresponding accounting of the notional rent.