GST Invoice

[Vishnu SR]

Hello All,

Greetings !!

I have few commercial building and I am paying GST for all the rents received from it. I have couple of questions in this regards.

1. In one of the building I collect the common electricity and water charges from individual tenents and I pay it by my self. Earlier, I used to send them an invoice once a quarter for these and they would send the payments to my account. But after GST, my auditors say that any invoice I raise should have GST component. But, how could I add GST for the common electricity and water bills ? Without any invoice my tenents won't release the payments.

2. Also, my tenents used to share few of the maintenance expenses such as RO charge, motor maintenance, borewell hardwater removal maintenance etc which are shared on cost only. There is no profit on these. I just get the invoices from these services and divide them equally amoung the tenents. For these charges I used to raise an invoice and send it to my tenents and they used to pay it to my account. If I raise an invoice without GST, my CA tells me that when he uploads the invoice or submits the invoice, he cannot skip any invoice numbers. So how do I manage my common expenses ? I have to raise the invoice to the tenents and they have to release the amount from their account department. Without invoice they would not release the payments.

Your assistance in this matter is greatly appreciated.

Vishnu

[Rajagopalan Ranganathan]

Sir,

Electricity is classifiable under heading No. 2716 00 00 and its intra state supply is exempted from CGST vide Sl. No.104 of Notification No. 2/2017-Central Tax (Rate) dated 2806.2017.

Similarly natural water is classifiable under heading 2201and its intra state supply is exempted from CGST vide Sl. No.99 of Notification No. 2/2017-Central Tax (Rate) dated 2806.2017.

The above goods are also exempted from payment of SGST vide Sl. Nos. 104 & 99 of Notification No. FD 48 CSL 2017, Bengaluru, dated: 29.06.2017 [NOTIFICATION (02/2017)] issued by Government of Karnataka.

In view of the above position you may issue a normal commercial invoice and you need not issue a taxable invoice. You have to issue taxable invoice only for the rent collected by you if the building is rented out for commercial purpose. If the buildings are rented out for residential purpose the services by way of renting of residential dwelling for use as residence is exempted vide Sl. No. 12 of Notification No. 12/2017-Central Tax (Rate) dated 28. Similarly SGST is also exempted vide Sl. No. 12 of Notification No. FD 48 CSL 2017, Bengaluru, dated: 29.06.2017[NOTIFICATION (12/2017)] of government of Karnataka..

[Vishnu SR]

Thanks for your quick response.

[Himansu Sekhar]

These charges are in addition to the service provided. These are not alienated from your business of renting. Also a substantial component of of furtherance of business which is attached with consideration albeit without any profit. In my opinion these charges are to be added to the taxable value and gst to be charged on the same. This is not a pure agent component.

[Chhatra Jain]

I do agréé with Rajgopalanji that électricity and Walter charges are GST exempt items one can not charge GST on that. As electric ans water bills are only reimbursed by tenant thèse are not services provided by thé supplier.

So a simple commercial Bill should be issued. Value of thèse bills will not form part of your taxable turnover.

AI Summary

GST exemption on electricity and water reimbursements allows ordinary invoices; commercial rent remains taxable. Electricity and natural water recoveries for tenants are treated in the discussion as intra state GST exempt and may be invoiced as ordinary commercial bills without GST. Commercial rent remains taxable and requires taxable invoices, while residential rent is exempt. Opinions diverge on whether reimbursed maintenance and utility charges form part of the landlord's taxable value: some treat them as non supply reimbursements excluded from taxable turnover, others treat them as integral to the renting service and includible in taxable value.