GST on Rental income : -
In this article we will discuss about GST on rental income from commercial property. Any person/ individuals receiving income from the residential property like shop/factory in a building or other that income from commercial property is taxable under the section 24 of Income tax Act. In other word, any payment receive from the occupation of the property is also known as rental income which is taxable under the good and services act. After the implementation of goods and services (GST) there are minor transformation/changes in the tax collection process on commercial rental income. As we know that GST has positive impact on the rental income of an individual. Gst will be applicable when a property is rented out a resendial property, only for residential purpose, it is exempt from Goods and Services Tax (GST). However, it is important to point out that any other type of renting out (except residential) or lease of real state property for commercial purpose would attracts a GST at 18%, as it would be considered as a supply of service. After the GST was executed, the threshold limit for GST has been increased to Rs.20 lakh from Rs.10 lakh. In other word, If the rental Income is less than Rs. 20 lakhs in a year, then it is exempted from payment of GST.
Impact of GST on Rental Income from commercial property: -
As we all know that there is an income when the rent is collected by owners/proprietors. The Income-tax act of India has a specific head of income, titled “Income from commercial property” to tax that rented income received by property owner/proprietors. Thus, the proprietor is liable to pay tax on rental income in India.
As we mentioned earlier, GST has a positive impact on the rental income of an individual. Under the GST Act, renting out of immovable commercial property or assets would be treated as a supply of services. Then it would be classified as a service, and it would attract tax. There are some rules on GST applicability on commercial rents that will be applicable when the rental income from commercial property is beyond 20 lakhs. When you rent out the residential property for residential purposes, it would be exempted from the GST. Any other type of rent out of immovable assets or property for the commercial purpose or business would attract GST at 18%.
Frequently Asked Questions
Yes, NRIs can enjoy rental income from property in India.
In case Owners/proprietor are also allowed to claim deduction for the interest on the money borrowed for the purpose of purchase, construction, repair /renovation of the commercial property. The money can be borrowed from any person and not necessarily as a home loan. Presently, there is no restriction on the amount of interest, which you can claim against your rental income.
Any person/ individuals receiving income from the residential property like shop/factory in a building or other that income from commercial property is taxable under the section 24 of Income tax Act. In other word, any payment receive from the occupation of the property is also known as rental income which is taxable under the good and services act.
Rental income from the property is a common source of income in India and for the financial year 2021-2022, income up to Rs 2,50,000 is tax-free for individual taxpayers.
