Notional RENT GST Applicability

[K Balasubramanian]

I am the owner of commercial space. I am using this space for my CA FIRM and I do not charge any rent. Is GST payable under RCM from 10/10/2024 on notional rent?

[KASTURI SETHI]

Dear Sir,

The following decision of AAR can be useful to arrive at concrete decision:-

2022 (2) TMI 1105 - AUTHORITY FOR ADVANCE RULING, TAMILNADU - IN RE : SHANMUGA DURAI

 

[Shilpi Jain]

Related party transaction. 

What is the GST registration status of firm and yours?

If both are unregistered - no GST liability.

[KALLESHAMURTHY MURTHY K.N.]

Sir, 

The commercial space in individual name is provided free of cost to your CA Firm. So there is a relationship of distinct persons. Since the commercial space is provided for the furtherance of business, GST is attracted. The property owner is liable to pay GST under RCM and therefore mandatorily required to obtain registration. The notional rent can be valued based on market value or under Rule 30 or 31 and pay taxes accordingly. 

AI Summary

Notional rent GST: free provision of commercial premises may attract reverse charge liability on the owner requiring registration.
Where an individual owner provides commercial premises free to a distinct firm for business use, the provision is a supply attracting GST under the Reverse Charge Mechanism; the owner must obtain GST registration and pay tax, with notional rent valued by market value principles or applicable GST valuation provisions. If both parties lack GST registration, no GST liability arises in the absence of registration.