regarding excemption on rent

[FARIDUDDIN AHMAD]

a government of india undertaking unit of factory engaged in the business of manufacturing at rae bareli collected rent of Rs-1,17,20,657/- from there employee on the residential facility provided to staff in the quatres(House) build for residential purpose and declared it in GSTR-3B as exempt supply. factory received SCN u/s 73 requiring to deposit tax on exempt supply. kindly advise it is exempt supply or taxable on the basis of RCM.

[KASTURI SETHI]

What is the period involved ?

[FARIDUDDIN AHMAD]

period involved is F.Y-2018-19

[KASTURI SETHI]

Are you sure it is rent ?

Has this amount been collected from all employees ?

What is the practice of such amount after 18-19 ?

[KASTURI SETHI]

A Govt.of India undertaking unit does not fall in the definition of Govt.

[Shilpi Jain]

If it is rent collected for the residential accommodation provided to the employees then there is an exemption available. GST is not liable

[Shilpi Jain]

However, you should check whether the department is asking you to pay GST on the rentals or it is asking you to reverse proportionate input tax credit?

[Shilpi Jain]

In case it is for reversal of credit, most probably the department would have taken the entire credit availed by the company and calculated the reversal.

You should consider only the common credit for the reversal and any specific credit.

If further clarity can be provided guidance can be given.

[FARIDUDDIN AHMAD]

may be some outsider not an employee has also been provided residential facility on rent. i humbly request kindly let me know notification/circular for exemption on rent collected from staff and what will be the treatment if it has been collected from outsider

[FARIDUDDIN AHMAD]

department has requested to reverse the common input credit as per rule 42 & 43.

[KASTURI SETHI]

Dear Querist,

In order to save expert's time, query should be proper and correct in the first instance.The whole scenario has changed.

[FARIDUDDIN AHMAD]

Sorry Sir. The SCN Issued is in respect of reversal of ITC As Per Rule 42 & 43. I Need Clarification Regarding Reversal of Common Input in proportanate to exempt supply is applicable to our exempt supply related to rent collected from staff.

AI Summary

GST exemption on staff residential rent and whether input tax credit must be proportionately reversed under reversal rules.
Whether rent charged by a Government of India undertaking from employees for residential quarters is an exempt supply under GST and whether common input tax credit must be proportionately reversed. The unit declared such receipts as exempt in GSTR-3B; a show cause notice requires reversal or deposit of tax. The department has sought reversal under the input tax credit reversal rules. The enquiry also raises the issue of different treatment if residential facilities were provided to outsiders rather than employees.