GST on Rental Income

[Ethirajan Parthasarathy]

During last one year most of the landlords are facing problem of collection of rent. Tenants ask for adhoc reduction, which is further reduced during lockdown period. Even the reduced rent is paid in instalments or even deferred

In such a situation, what is the safe approach for the landlord to file his monthly GST returns and payment of tax thereon.

[KASTURI SETHI]

In this very scenario, I am of view that if there is no consideration, there will bo no tax as it will not be hit by Section 7 (c) of CGST Act. In case no rent is received or reduced rent is received, that will be accepted by the department due to Covid-19 epidemic

So far as legality is concerned, the best safe approach is to revise rent deed and it should be drafted in such a way that the agreement should cover all aspects, especially, relating Covid-19.

Also take care of the following points :-

As and when the landlord raises invoice, his liability arises and also in the absence of invoice, the date fixed for receipt of rent will be time of supply.

[Ganeshan Kalyani]

I fully agree with the views of Sri Kasturi Sir. The agreement must be amended to include terms such as "if there is lockdown imposed by Govt. then tenent is relaxed from payment of rent or such reduced rent as agreed between both the parties." So only on rent actually received the owner will become liable to pay GST. The department would consider such agreement in this current situation.

[Alkesh Jani]

Shri

I agree with the views expressed by our Experts. However, If agreement is in force and cannot be amended, you can raise the Invoice stating actual value and then you can raise Revised Invoice and in description you can mention "Relaxation due to COVID-19" and can reduced the value. if No amount is received you can raise Invoice as above and issue Credit Note. As there is no revenue loss to the department, if GST is paid as per amount received and entered in the books of Accounts.

This is my perspective.

Thanks

[KASTURI SETHI]

Sh.Alkesh Jani Ji,

Thank you very much for polishing the above views. Really appreciable. Original additional contents.

[Alkesh Jani]

Shri Kasturiji Sir,

The word "thank you" is the just dot symbol of my gratitude for such encouraging words.

With Due Regards

Alkesh Jani

[Anand Singh]

I agree with experts, the agreement must be modified to include all relevant terms.

AI Summary

GST on rental income applies only to rent actually received; amend leases and use invoices or credit notes. GST on rental income is chargeable only on actual consideration received; landlords should amend lease agreements to record agreed reductions or deferrals so liability aligns with revised consideration. An invoice creates tax liability and, if no invoice is issued, the date fixed for receipt governs the time of supply. Where agreements cannot be amended, revised invoices and credit notes describing COVID-19 relaxation should be issued and books should reflect amounts actually received to support charging GST only on realized rent.