tenant registered in another state taking property on rent from unregistered person in another state

[Sushil Kumar Tibrewal]

My company is registered in Gujrat and taking property situated in Delhi on rent from an unregistered person for registered office only. how to pay gst on RCM basis? whether my company should take registration in delhi also 

[Sadanand Bulbule]

Yes. In terms of Section 24(iii) of the CGST Act, a person liable to pay tax under RCM must take registration in the State where such services are received.

[Sushil Kumar Tibrewal]

sadanand bulbule ji,

In 24(iii) only registration word is used. and my company is already registered. 

 

[Sadanand Bulbule]

Plz re-visit your query and refer the following:

Compulsory registration in certain cases.

24. Notwithstanding anything contained in sub-section (1) of section 22, the following categories of persons shall be required to be registered under this Act,––

(i) XXXX

(ii) XXXX

(iii) persons who are required to pay tax under reverse charge

In terms of the above statutory position, you need to take registration at Delhi also. If you have any further doubts, plz feel free to post them.

[VENU K]

In my humble opinion Section 24(iii) does not say that you need to be registered in every State where reverse charge tax liability arises — only that you must be registered somewhere to discharge RCM liability.

• You (recipient) are registered in Gujarat,

• Property is in Delhi (different state),

• This is an inter-state supply under Section 7 of IGST Act,

• You are liable to pay IGST under RCM.

[Sushil Kumar Tibrewal]

unregistered landlord is also residing in Delhi

[Sadanand Bulbule]

 Refer Issue ID : 120235. Much water has flown on the same subject.

[Sushil Kumar Tibrewal]

unregistered landlord is also residing in Delhi

[Sushil Kumar Tibrewal]

VENU K  JI

IN THE ABOVE CASE LAND LORD IS ALSO RESIDING IN DELHI 

[Sadanand Bulbule]

 The GST regime has been rolled out with effect from July 01, 2017 is a destination or consumption-based tax regime. In other words, GST is a tax on goods and/or services that gets accrued to the State/UT where they are actually consumed. The basic principle of this taxation regime is the States/UTs get GST on all goods actually consumed in their State/UT irrespective of where they are manufactured. The basic principle of this taxation regime is the States/UTs get GST on all goods/services actually consumed in their State/UT.

In this background, the provision of Section 24[iii] of the CGST Act comes into play as the rental services are consumed in the geographical territory of Delhi. So tax on such transaction under RCM is due to Delhi.

[KALLESHAMURTHY MURTHY K.N.]

 I agree with Sadanand Bulbule, Sir. The place of supply is Delhi, and IGST is not applicable.  A registered person taking property on rent from an unregistered person is liable to tax under RCM. Therefore, it is necessary to obtain registration in Delhi, where the services are supplied.

[Shilpi Jain]

The RCM liability on renting of the commercial property does not arise if person is un-registered.

Unlike GTA, liability under RCM exists, whether or not the recipient is registered. In such cases, s 24 will apply and one may need to take registration mandatorily to pay off the RCM liability.

In this case one may take a stand that the person is not registered in Delhi and so not liable to RCM. Though could be a disputed stand.

Also in this case liability being CGST & SGST of Delhi, it is not possible to make such tax payment, even if it is considered that there is GST liability in the present case.

 

[Sadanand Bulbule]

My above posts are in terms of Section 8(2) read with Section 12(3) (a) & (b) of the IGST Act, 2017. Any little mis interpration is likely to shake the essence of the GST Act-the place of supply of service. Choice is left the querist to be prudent or otherwise. Risk cannot be the reward.

AI Summary

Reverse charge registration requirement: recipient may need state registration to discharge RCM on rented immovable property consumed there.
A registered recipient renting property from an unregistered landlord must generally pay tax under the reverse charge mechanism where the place of supply is the property's location; Section 24(iii) mandates registration for persons required to pay tax under RCM, so the recipient may need to obtain registration in the State where the rented premises are consumed to discharge local CGST/SGST obligations and compliance duties.