Place of supply for renting of immovable property

[V Rajalakshmi]

A person having a place of registration in Chennai having a commercial prop in TN and in Karnataka. is it mandatory for him to obtain reg in Karnataka or can he raise igst inv from TN for karnataka property.

[Rajagopalan Ranganathan]

Madam,

According to Section 12 (3) (a) 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; shall be the location at which the immovable property is located or intended to be located. Therefore you have to take a seperate registration in the State of Karnataks since GST is a tax on consumption of goods or service nor both. You cannot issue an invoice from Tamilnadu. The Karnataka State GST auithorities will object to the same.

[Arjun Prajapati]

Yes he has to obtain registration in Karnataka State as well.

[KASTURI SETHI]

Registration is required ONLY 'FROM WHERE SUPPLY' is made.

[Shyam Naik]

IGST invoice can be raised.

[KASTURI SETHI]

Yes. I agree with you.Also see the definition of, 'Place of business' and 'Fixed Establishment' in this context.

[KASTURI SETHI]

Yes. I agree with you.Also see the definition of, 'Place of business' and 'Fixed Establishment' in this context. Problem may be in using IGST.

[KASTURI SETHI]

If the recipient can use IGST freely (without any hindrance), then there is no problem in raising IGST invoice.

[V Rajalakshmi]

Sir, I am of the view, that registration in Karnataka is not required and the provisions Sec 22, and Sec 2(71) of CGST and Sec 12(3) and Sec 7(3) of IGST need to be conjointly read to get the real essence of legal provisions.

[Shilpi Jain]

The Karnataka premises can be rented from the TN premises. So supply can be made from TN itself. No registration required in Karnataka.

[KASTURI SETHI]

During the year 2017-18, one of my clients faced similar issue. He rented immovable property located in Himachal Pradesh from registered premises in Haryana. His tenant was not able to use IGST as input tax credit so after one year that person got registered in H.P. No problem has been faced.

[Shilpi Jain]

Why was the tenant not able to use the IGST charged?

AI Summary

Place of supply for immovable property: charge tax where the property is located, often requiring local registration.
Place of supply for renting immovable property is the location where the property is situated; suppliers located in a different State generally must obtain registration in the State of the property and comply with local GST collection and invoicing requirements. Divergent practice exists where suppliers invoice from their home State and charge IGST, but this can impede the recipient's ability to claim input tax credit, prompting recipients to seek local registration. Assessment of place of business and fixed establishment is relevant to determine the correct registration and invoicing approach.