ITC in case of renting of immovable properety

[Amisha Aggarwal]

If supplier is registered in Delhi and rented out property in Jaipur to recipient registered in jaipur. can recipient claim ITC.

POS and recipient states are same but supplier state is different. is ITC restricted?

 

[Sadanand Bulbule]

 ITC can be claimed by the recipient of services, if such rented immovable property is used in the course of furtherance of business. Since there is no inter-state supply of rental service from Delhi to Jaipur, the owner of the property has to take registration in the State of Rajastan and charge CGST & SGST as it is a intra-state supply of service. Such ITC is not blocked under Section 17 of the Act.

[YAGAY andSUN]

You're absolutely right in your analysis, and your interpretation aligns with the GST framework and place of supply rules under the IGST Act and CGST Act.

Let’s summarize and clarify the key points:

✅ Final Position:

• Nature of Supply: Since the service pertains to immovable property located in Rajasthan, as per Section 12(3) of the IGST Act, the Place of Supply (POS) is Rajasthan.
• Supplier’s Location: If the supplier is registered in Delhi (and not in Rajasthan), and provides services in Rajasthan, this creates a problem under GST, because:
  • Location of supplier: Delhi
  • POS: Rajasthan
  • Hence, inter-state supply, and IGST would be charged.
• BUT, the service (renting of immovable property) is not inter-state by nature — because GST law says POS for property = location of the property → Rajasthan.

🔶 Therefore:

• The supplier must register in Rajasthan (either as a normal or casual taxable person).
• Then, they should issue a Rajasthan GST invoice with CGST + SGST.
• Only then can the Jaipur-registered recipient claim valid ITC, since:
  • The ITC is not blocked under Section 17.
  • The service is used in the course or furtherance of business.
  • Proper tax (CGST + SGST) is charged and credited.

🚫 If Supplier Doesn’t Register in Rajasthan:

• Charges IGST from Delhi registration.
• Recipient in Rajasthan cannot claim ITC because:
  • The GST law does not support ITC claim when the POS and recipient state match, but supplier state is different.
  • Such a transaction is ineligible for ITC due to mismatch in registration jurisdictions.

✅ Conclusion:

• Supplier must register in Rajasthan to comply with GST law.
• Only CGST + SGST is correct for such rental transactions.
• Recipient can claim ITC if:
  • Proper Rajasthan invoice is issued.
  • Property is used for business purposes.
  • Section 17 restrictions do not apply.

***

[Ramanathan Seshan]

Dear Amisha,

 Scenario Breakdown:

• Supplier: Registered in Delhi
• Property Location: Jaipur, Rajasthan
• Recipient: Registered in Jaipur, Rajasthan
• Nature of Supply: Renting of immovable property (service)

🔹 1. GST Law on Place of Supply (POS) for Renting of Immovable Property

Under Section 12(3) of the IGST Act, 2017, for services related to immovable property, the Place of Supply (POS) is the location of the immovable property.

➡️ So, POS = Jaipur (Rajasthan)

🔹 2. What GST Should the Supplier Charge?

This is critical.

Since:

• The supplier is registered in Delhi, and
• POS is in Rajasthan (different state),

The supply is treated as an inter-state supply, and the supplier must charge IGST.

🔹 3. Can the Jaipur Recipient Claim ITC on IGST Charged?

✅ Yes, the Jaipur recipient can claim ITC on the IGST, provided:

• The recipient is registered in the same state as the Place of Supply (Jaipur → Rajasthan ✅)
• The invoice is issued correctly with IGST, not CGST+SGST
• The service is used in the course or furtherance of business
• The recipient is not blocked under Section 17(5) (e.g., for personal use, etc.)

⚠️ Common Mistake to Avoid

If the Delhi-registered supplier incorrectly charges CGST + SGST of Delhi, the Jaipur recipient cannot claim ITC — because:

• The POS is Rajasthan, not Delhi
• Recipient is in Rajasthan — credit of Delhi SGST is not available

✅ Therefore, supplier must charge IGST, even though the property and recipient are in Rajasthan.

 Final Answer:

Yes, the recipient can claim ITConly if the supplier charges IGST (not Delhi SGST/CGST), because:

• Place of Supply = Rajasthan (location of the immovable property)
• Recipient = Rajasthan (registered in POS state)
• ITC of IGST is available to the recipient

Regards,

S Ram

[Shilpi Jain]

POS is jaipur, supplier location is delhi. IGST to be charged and recipient would be eligible for credit if other conditions under law satified.

AI Summary

GST Implications: Inter-State Property Rental Requires IGST Charge and Proper Invoice for ITC Claim Under Section 17 A registered supplier in Delhi renting out property in Jaipur to a Rajasthan-registered recipient raises GST complexities. The Place of Supply (POS) is Jaipur, making it an inter-state supply. The supplier must charge IGST and register in Rajasthan. The recipient can claim Input Tax Credit (ITC) if the service is used for business purposes, the invoice is correct, and Section 17 restrictions do not apply.