Place of supply

[Kaustubh Karandikar]

XYZ (Maharashtra) had given a Commercial property in Mumbai on rent to PQR for their office. PQR is registered with GST in Daman as a manufacturer. XYZ is issuing invoice to PQR in the name of office address in Mumbai and treating them as URD since PQR is not registered with GST in Maharashtra being having only office in Mumbai. For the rent charged, XYZ is charging CGST + SGST. Is it correct or they need to charge IGST?

[Rajagopalan Ranganathan]

Sir,

According to Section 12 (3) of IGST Act, 2017-

The place of supply of services, -

(a) directly in relation to an immovable property, including services provided by architects, interior decorators, surveyors, engineers and other related experts or estate agents, any service provided by way of grant of rights to use immovable property or for carrying out or co-ordination of construction work; or

(b) by way of lodging accommodation by a hotel, inn, guest house, home stay, club or campsite, by whatever name called, and including a house boat or any other vessel; or

(c) by way of accommodation in any immovable property for organising any marriage or reception or matters related thereto, official, social, cultural, religious or business function including services provided in relation to such function at such property; or

(d) any services ancillary to the services referred to in clauses (a), (b) and (c),

shall be the location at which the immovable property or boat or vessel, as the case may be, is located or intended to be located :

Provided that if the location of the immovable property or boat or vessel is located or intended to be located outside India, the place of supply shall be the location of the recipient.

In your case the owner of the property (XYZ) and the property are located in the State of maharshtra, CGST and SGST is payable on the rent charged.

[KASTURI SETHI]

CGST/SGST applicable.

AI Summary

Place of supply rules: rent of immovable property located in state attracts CGST and SGST, not IGST. Under Section 12(3) of the IGST Act, services directly related to immovable property are supplied at the location of that property; therefore rent of a commercial office located in Maharashtra is an intra state supply and attracts CGST and SGST rather than IGST.