Rent collected from employees for renting out the residential quarters of factory will attract GST under RCM

[Venkata K]

Dear Sir 

we are collecting rent of Rs. 3500/- for one residential quarters located near factory to our employees whether Registered dealer has to remit GST under RCM 

 

[Sadanand Bulbule]

Refer Entry No.12 of Notification No. 12/2017-CTR dated 28/06/2017 which provides exemption of tax on the following services.

12

Heading 9972

Services by way of renting of residential dwelling for use as residence except where the residential dwelling is rented to a registered person.

The property must be a residential dwelling for exclusive use as a residence only.  Hence there is no need to pay tax under RCM.

 

[Shilpi Jain]

If employee is not registered under GST, no RCM - another aspect to note.

[Venkata K]

Madam 

If the employee is registered and it Industrial quarters are taken on rent for residential purpose is also falls under RCM. 

AI Summary

Renting residential dwelling to employees: GST reverse-charge applies where the employee is a registered person; exemption otherwise. Services of renting of residential dwelling for use as residence are exempt from GST when the premises are used exclusively as a residence. However, if the recipient is a registered person the exemption does not apply and the liability may be attracted under the reverse charge mechanism, so determination depends on (a) the residential character of the quarters and (b) the employee's GST registration status.