GST on renting of immovable property

[Shreyansh Mehta]

if a supplier is registered in multiple states and let out property on rent so what should be charged CGST and SGST / IGST.

Eg : If a supplier is registered in maharashtra and also registered in gujarat and had let out property on rent located in gujarat. so what should he charged CGST and SGST / IGST?

In my case he had issued an bill with IGST and given number of maharashtra branch so is it okay ?? or he has to compulsory charged CGST and SGST as he is registered in gujarat.

[Amit Agrawal]

As per Section 2 (71) of the CGST Act, 2017, “location of the supplier of services” means,–

(a) where a supply is made from a place of business for which the registration has been obtained, the location of such place of business;

(b) where a supply is made from a place other than the place of business for which registration has been obtained (a fixed establishment elsewhere), the location of such fixed establishment;

(c) where a supply is made from more than one establishment, whether the place of business or fixed establishment, the location of the establishment most directly concerned with the provisions of the supply; and

(d) in absence of such places, the location of the usual place of residence of the supplier;

While supplier's action - as per facts narrated in your query - is odd, same is NOT necessarily mean that it is wrong / illegal. One does not know how supplier has structured its business operations and GST compliance strategy at his end.

Your query raised in from point of view of recipient of subject services who presumably wants to take ITC against IGST so charged by the supplier and concerned that such ITC will be disputed by Dept. in future. If so, my views are as under:

A. Taking ITC of IGST so charged can be legally defended judicially.

B. Kindly ensure that as per your written agreement & understanding with the supplier that in case of dispute raised in future by Dept., you will NOT allow the supplier to change the invoices raised & it is responsibility of the supplier (& not yours) to defend type of taxes charged by him and GSTN used to levy such taxes.

For above suggestion, it is presumed that address of supplier mentioned in your lease / rental agreement is that of Maharashtra & not that of Gujrat. Of-course, address of property given on lease / rental (which is different from address of supplier) will be that of Gujrat. BUT, if address of supplier mentioned in your lease / rental agreement is that of Gujrat, to avoid needless disputes etc., you should ideally ask him to levy CGST & SGST from supplier's gst registration taken in Gujrat.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Padmanathan KV]

Section 22 of CGST Act, 2017:-

22. (1) Every supplier shall be liable to be registered under this Act in the State or Union territory, other than special category States,from where he makes a taxable supply of goods or services or both, if his aggregate turnover in a financial year exceeds twenty lakh rupees:

Section 22 of Gujarat GST Act, 2017:-

22. (1) Every supplier making a taxable supply of goods or services or both in the State shall be liable to be registered under this Act if his aggregate turnover in a financial year exceeds twenty lakh rupees:

On conjoint reading of Section 22 of CGST Act and Section 22 of Gujarat GST Act, the supplier shall be liable to be registered in the State of Gujarat.

As per the facts in query, the RP is already registered in State of Gujarat (unknown as to whether he obtained registration for supplying rental service or not).

So, RP has to raise CGST + SGST from Gujarat Registration in my view. (I am open to contrary views which are possible on this issue, this is only my view).

The crux of the matter, to my understanding of the issue is, where is the person providing the service from? is it from MH or Guj?

[Shreyansh Mehta]

The registered person is registered in both the states and i want to know that if i am issuing bill from maharashtra only negative point is that i cannot claim input tax credit against the liability . But if i issue bill from gujarat i can claim ITC against the liability. For recepient it will be same from whichever state i am issuing bill. Recepient can claim ITC of Rent paid.

My point of view is from supllier side.

Thankyou for the reply to the queries

[KASTURI SETHI]

As per Section 12(3) of IGST Act, the place of supply of services relating immovable property shall be the location at which the immovable property is located. So I agree with the following view of Sh.Padmanathan Kollengode Ji as opined above :-

"So, RP has to raise CGST + SGST from Gujarat Registration in my view."

[Padmanathan KV]

Learned Kasturi Sir,

My views are not based on Place of Supply, but the liability itself to get registered u/s 22 and pay tax u/s 9, will fall in the State of Gujarat.

[KASTURI SETHI]

Sh.Padmanathan Kollengode Ji,

O.K. Regarding conclusion, we are on the same page but path is different.

[Shilpi Jain]

Why is the person registered in MH and GJ? If there is no other supply in the State of GJ then registration can be cancelled and invoice can be issued only from MH as IGST.

[GUNASEKARAN K]

Its very simple;

The properties located in Gujarat & Maharashtra, also he registered in both States.

Place of Supply is same as place of property. So Invoice must be issued from the state of property is located and CGST & SGST only applicable.

AI Summary

GST on Rental Properties: Charge CGST & SGST if Property in Gujarat; Invoice from Property's State for ITC Eligibility. A discussion on the Goods and Services Tax (GST) implications for renting immovable property across states, specifically Maharashtra and Gujarat. The central question is whether to charge Central GST (CGST) and State GST (SGST) or Integrated GST (IGST) when a supplier is registered in multiple states. Participants highlight that the location of the immovable property dictates the GST type, with CGST and SGST applicable if the property is in Gujarat. The consensus is that the supplier should issue invoices from the state where the property is located to ensure compliance and eligibility for Input Tax Credit (ITC).