TaxTMI 
TaxTMI 
Two Directors of XYZ Pvt. Ltd. are owning a Residential Premises. These directors are also staying in the same premises. Rent for the premises is paid by XYZ to both the directors. Whether XYZ is liable to pay GST on the same under reverse charge as per the new provisions introduced?
Reverse Charge - Renting of Residential Premises
16 Sep 2022 
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Reverse charge on residential rent: companies may face GST obligations depending on exemption, characterization, and employer-employee nature.
Applicability of GST under the reverse charge mechanism for rent paid by a company to director-owners hinges on statutory notifications and factual characterisation. One view treats such payments as RCM-liable supplies to a registered person; another invokes an exemption for residential use. If the payment is remuneration or reimbursement within an employer-employee relationship, it may be outside GST under Schedule III. Liability also depends on whether directors are taxable persons in their individual capacity. (AI Summary)
Applicability of GST under the reverse charge mechanism for rent paid by a company to director-owners hinges on statutory notifications and factual characterisation. One view treats such payments as RCM-liable supplies to a registered person; another invokes an exemption for residential use. If the payment is remuneration or reimbursement within an employer-employee relationship, it may be outside GST under Schedule III. Liability also depends on whether directors are taxable persons in their individual capacity. (AI Summary)