JOINT OWNERS OF THE PROPERTY AND RENT.

[Sadanand Bulbule]

Dear Sirs

Person A & B are the residents of Kerala and are joint owners of two commercial complexes in Karnataka. They have one joint bank account and received ₹ 24 Lakhs as rent on commercial buildings during 2018-19. Both of them have filed Income Tax returns declaring 50% of their rental income and they have claimed that their individual turnover is less than ₹ 20 lakhs, the threshold limit prescribed and not labile for registration under GST.

The question is whether there is any provision under the GST Act for sharing the rental income like this and get away from registration under the GST Act?

Pl enlighten with relevant provisions.

[Alkesh Jani]

Sir,

In this regards, I am of the view that, as per the Definition of "Person" given at Section 2 (84) (g) of CGST Act, 2017, the body of individuals (BOI) are also liable to register themselves under GST if the turnover exceeds threshold limit. The procedure followed by them may be for Direct taxes, but not for GST.

Thanks,

With Regards

[Sadanand Bulbule]

Thank you so much Sir.

[KASTURI SETHI]

Also Examine your issue in the light of the following decision :-

2018 (18) G.S.T.L. 152 (A.A.R. - GST) = 2018 (10) TMI 595 - AUTHORITY FOR ADVANCE RULINGS, KERALAIN RE : ELAMBRANCHERI KHALDOON

[Rajagopalan Ranganathan]

Sir,

If a building is co-owned by two or more persons and the rent received is equally divided between them and share of each individual owner is below the small scale exemption limit of ₹ 20 lakhs then the individual owners need not get registered under GST Act and pay gst. vide ruling of AAR (Kerala) in Elambrancheri Khaldoon = 2018 (10) TMI 595 - AUTHORITY FOR ADVANCE RULINGS, KERALA

[Alkesh Jani]

Dear Experts,

I fully agree with the decisions of Advance Ruling. However, it is important to note that the decision is binding only to the applicant and jurisdictional officer within the state. In the instant case, the querist have not gone for any sort of advance ruling, and no decision of high court of supreme court is available in GST. Therefore, it can be advised that querist may opt for provisional assessment or for advance ruling, to avoid any future litigation in the matter.

Thanks,

With regards

[KASTURI SETHI]

I fully agree with Sh.Alkesh Jani Ji.

[Sadanand Bulbule]

Thanks to all the experts for their fabulous clarifications with relevant rulings on the subject.

With profound regards to all.

[KASTURI SETHI]

One case law pertaining to pre-GST era is being posted for guidelines to be taken care of. This judgement has been accepted by the department. On the basis of this case law, my client's case was decided in his favour. This can help you even in the GST regime.

2015 (40) S.T.R. 1146 (Tri. - Mumbai) = 2015 (9) TMI 790 - CESTAT MUMBAI COMMISSIONER OF C. EX., NASIK Versus DEORAM VISHRAMBHAI PATEL

[Sadanand Bulbule]

Sethi Sir

Thank you so much for your comprehensive and thorough study of the issue on hand.I hope such intellectual discussion from multiple dimensions of the ticklish issues would certainly benefit not only the visitors of TMI in general but also in removing injustice to the genuine stakeholders.

Warm regards Sir.

[Ganeshan Kalyani]

Sri Kasturi Sir is a sea of taxation. He has answer to all the queries. His drafting is too good. His selfless contribution is really appreciable.

[KASTURI SETHI]

Sh.Ganeshan Kalyani Ji,

A huge thank you for your compliments !. Actually we learn from each other on this platform by sharing our knowledge and thus resolving the problems of the visitors of TMI site.

AI Summary

GST registration threshold for joint owners: individual shares below small supplier limit may negate registration obligation.
When co-owners divide rental receipts so that each individual owner's share falls below the small supplier threshold, individual owners need not register for GST on that rental income; however, Authority for Advance Rulings decisions recognizing this principle bind only the applicant and the jurisdictional officer within that State, so taxpayers should consider obtaining an advance ruling or provisional assessment to mitigate future dispute risk.