GST on Repairs Recovered

[Ethirajan Parthasarathy]

While the tenant vacates, the Landlord with holds certain sum, towards damages caused by the tenant.

Is Landlord (who is GST registered) liable to pay GST on such sum recovered from the tenant.

AI Summary

GST Applies to Landlord's Retained Amount for Tenant Damages Under Schedule-II Serial No.5(e) of CGST Act. A landlord, registered under GST, inquires about the tax implications of retaining a sum from a tenant for damages upon vacating. It is clarified that such transactions fall under Schedule-II Serial No.5(e) of the CGST Act, involving obligations to tolerate an act. Experts agree that GST applies to the retained amount, although a small-scale exemption might apply if the landlord is not registered. Once registered, no exemption based on value is applicable. The discussion highlights a misunderstanding about the scope of small-scale exemptions under GST, which apply only to registration, not to tax liability once registered.