A GST registered person gives away commercial space to a trader by taking quite a large amount as refundable deposit. The understanding is the trader will use the space for business purpose for a period of 7 years without payment of any rent, after expiry of 7 years he has to surrender the place back to the Landlord who will return the large deposit received.
As per Income Tax Law the landlord has to pay Income tax on the notional rental income in respect of above arrangement.
I would like to know GST implication on the Land lord in the above circumstance.
Landlord's No-Rent Deal Faces GST on Notional Rent: Rule 27 and Section 2(31) of CGST Act Explained A GST-registered landlord provided commercial space to a trader for seven years in exchange for a large refundable deposit, with no rent charged. The landlord is concerned about GST implications on this arrangement, as income tax law requires paying tax on notional rental income. Experts in the forum advised that GST should be calculated based on the open market value of similar properties, as per Rule 27 of the CGST Rules. They agreed that notional rent qualifies as 'consideration' under Section 2(31) of the CGST Act, 2017, and is considered a supply of service. (AI Summary)
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