Rental Income by Director from Company

[Raveendran PM]

Issue : 1

Director had let out his commercial property in 2021-22 to its company, where company had paid under Reverse Tax , being there was grey area on this aspect, on which CBIC clarified in Aug-2023 m that such income should be under forward charge only .

Rental Income for 2021-22 was 23 lakhs and 2022-23 -29 lakhs.

What recourse to be taken now ?

Form 2023-24, after the above clarification no RCM paid by the company, and director want to take the registration , on crossing 20 lakhs, If it is correct?

Issue : 2

Can Director give his residential property to its company at nominal value , say as consent Fees, on considering the Rule 28 provisions . As the liability under reverse charge, company can avail IT

CA. Raveendran P M

AI Summary

GST treatment of director rental income: prior company payment under reverse charge removes duplicate liability; valuation depends on ITC eligibility.
For rent paid by a company to its director, GST already discharged by the company under reverse charge eliminates duplicate GST liability for the director; obtain a company declaration to evidence reverse charge payment. Under related-party rules and Rule 28, where the recipient company is fully eligible for input tax credit and not engaged in exempt activities for the premises, invoice value may reflect market value or, alternatively, a nominal consideration may be acceptable with GST claimable by the company as ITC, subject to documentation of ITC eligibility.