RCM on Delhi office rent by a Punjab-registered company

[Keshew Aggarwal]

A private limited company is GST registered only in Punjab, where its manufacturing plant is located and all outward supplies are made from Punjab.

The company also has an administrative/accounting office in Delhi, but no supply is made from Delhi and the company does not have a separate GST registration in Delhi.

The company pays approximately Rs. 6 lakh annual rent for the Delhi office to an individual landlord who is not registered under GST.

My query is whether RCM is payable on the Delhi office rent, considering that:

• The property is situated in Delhi.

• The landlord is an unregistered individual.

• The recipient company is registered only in Punjab.

• The Delhi office is used only for administrative/accounting purposes.

• No taxable supply is made from Delhi.

If RCM is not payable, kindly clarify the relevant provisions/notification supporting the same.

If RCM is payable, please clarify under which GSTIN it should be discharged and whether the company can claim ITC of the RCM paid.

Please guide with reference to the relevant provisions of the CGST/IGST Act and applicable RCM notifications.

[Raam Srinivasan Swaminathan Kalpathi]

Dear Querist

Parent Notification No.13/2017-Central Tax (Rate) was amended vide Notification No.09/2024-Central Tax (Rate) w.e.f 10-Oct-24 to provide that where the landlord is unregistered the tenant of the commercial property must discharge GST on RCM.

The company has 2 options, viz.,

i) Take registration in Delhi and discharge GST and charge the amount to the revenue statement, or

ii) To avail ITC, the tenant must take ISD and distribute the ITC availed to your Punjab GSTN. W.e.f. 01-04-2025 the cross charge window is not available.

Depending on the materiality of the amount the company will have to take a call.

AI Summary

Reverse-charge liability for unregistered office rent turns on registration location, taxability, and input tax credit availability.
Reverse-charge liability on rent is considered where a company registered under GST only in Punjab maintains an administrative and accounting office in Delhi. The office makes no taxable supplies, the property is rented from an unregistered individual, and the company's manufacturing and outward supplies are conducted from Punjab. The issues concern applicability of reverse charge, the appropriate GSTIN for discharging any tax, and availability of input tax credit on tax paid.