Residential Dwelling - RCM

[Ethirajan Parthasarathy]

Recently letting out residential dwelling to registered person is brought to GST under RCM.

In one case, an apartment is let out to business entity registered under GST.

The landlord is already charging GST under “forward charge”

Is it now required that landlord should stop charging GST and tenant should start paying GST under RCM

[KASTURI SETHI]

In this scenario, GST is to be paid under RCM.

[Vijay kumar]

I differ with Kasturi ji.

Prior to 18.7.2022, the exemption entry No.12 under Nofn.12/2017-CT read as - Services by way of renting of residential dwelling for use as residence.

Post 18.7.2022, the said entry is amended as - Services by way of renting of residential dwelling for use as residence [except where the residential dwelling is rented to a registered person].

In essense, a residential dwelling for use as office/commercial establishment was taxable earlier also, under forward charge. In this case, that is the reason the landlord was charging GST.. Hence it continues to be under forward charge, in my view

[KASTURI SETHI]

There is a phrase , 'Dissent is decent'. Different views on any issue opens the avenues for more knowledge and that too fool-proof and hence in the interest of visitors of this forum.

[Amit Agrawal]

I concur with views of Shri Kasturi Sethi Ji.

For reason for my concurrence, one may refer to discussions we had on this subject (specially, my post at serial number 11) under Issue-ID 118055 on TMI bearing subject-line as 'GST on service of renting of residential dwelling w.e.f. 18-07-2022 

These are strictly personal views of mine and the same should not be construed as professional advice / suggestion. I respect contrary views.

[Ganeshan Kalyani]

Vijay Sir, the entry now reads as renting of residential dwelling to a registered person is taxable under RCM. Here, the use of the word residential dwelling for use as residence is mentioned, which means it may be for use as residence or use for commercial purpose. RCM is applicable.

I agree with both the experts.

[KASTURI SETHI]

Notification says ---"To a registered person". It means registered for business purpose only --- either for supply of goods or services or both.

[AdvMurari Kumar]

agreed with kashturi ji

AI Summary

Reverse Charge Mechanism on residential rent now applies when dwelling is let to a registered person. Amendment effective 18-07-2022 removes the exemption for renting residential dwellings when the lessee is a registered person, bringing such supplies under the reverse charge mechanism so that the registered recipient bears GST. There is a factual and interpretative dispute: one reading applies RCM uniformly for rentals to registered persons, while an alternative reading maintains forward charge liability where the dwelling was already taxed as commercial/office use before the amendment. The phrase 'to a registered person' is understood to mean registration for business purposes.