Symbiosis Institute of Management Studies, Khadki, Pune

EVALUATION SHEET
(COVER PAGE)

INTERNAL EVALUATION/ ASSIGNMENT NAME & No:

(Internal)
[Compulsory Submission for Internal Evaluation]

Subject Code : T1324 Subject: Goods and Service Tax

Prof. Name: CA. P K Rajagopal

Course/ Program and Batch: MBA(Executive), Weekend Offline 2022-2024

PRN: 22020448090 _ Student Name: Manju Mandan

PRN: 22020448049 _ Student Name: Digvijay Singh Chauhan
PRN: 22020448088 _ Student Name: Manjari Singh Kushwaha

Date of submission: 31 / 08 / 2022

Submitted to: _Subject Email Id/ gst@sims.edu Signature of Student: Digvijay Singh Chauhan

Evaluation:

TOTAL
Question 1 2 3 4 5
(Out of 30)
Marks
Allotted

Evaluated by: _________________________________________ Signature of Faculty ___________________

Date: _______________2022
 GST law on taxability of rental income from land and
Property

The various terms used or as defined under the law.

Section 2(84) of CGST Act, 2017 defines

“person” includes —

(a) an individual

(b) a Hindu Undivided Family

(c) a company

(d) a firm

(e) a Limited Liability Partnership

(f) an association of persons or a body of individuals, whether incorporated or not, in India or outside India

(g) any corporation established by or under any Central Act, State Act or Provincial Act or a Government company as
defined in clause (45) of section 2 of the Companies Act, 2013 (18 of 2013)

(h) anybody corporate incorporated by or under the laws of a country outside India

(i) a co-operative society registered under any law relating to co-operative societies

(j) a local authority

(k) Central Government or a State Government

(l) society as defined under the Societies Registration Act, 1860 (21 of 1860)

(m) trust

(n) every artificial juridical person, not falling within any of the above

Section 2(94) of CGST Act, 2017 defines:

“Registered person” means a person who is registered under section 25 but does not include a person having a Unique
Identity Number.

Thus, any person who is not registered as per section 25 would be termed as “Unregistered person”.

Section 25 of CGST Act, 2017 provides procedures for registration which can be referred under the CGST Act, 2017.
Term “Residential Dwelling “is not defined under GST Acts, 2017 but it is such term is referred in the following
notifications which are tabulated below.

(1) (2) (3) (4) (5)

Notification 9/2017- IGST Tax (Rate) Heading 9963 or Services by way of renting of Rate – Condition –
dated 28.06.2017 Entry No 13 & Heading 9972 residential dwelling for use as NIL NIL
residence.
Notification 12/2017-Central Tax
(Rate) dated 28.06.2017 Entry No 12

The above entries are also amended vide Notification No 04/2022 dated July 13,2022 which are tabulated
below:

(1) (2) (3) (4) (5)

Heading
Notification 04/2022- Central 9963 or Services by way of renting of residential dwelling for
Rate – Condition –
Tax (Rate) dated 13.07.2022 use as residence except where the residential dwelling
NIL NIL
Entry No 12 Heading is rented to registered person.
9972

SAC Classifications specifies as under

9963 Accommodation, food and beverage services

99631 Accommodation services

This group includes accommodation services provided for the purposes of leisure or business or others.

996311 Room or unit accommodation services

This service code includes accommodation services consisting of rooms or units, with or without kitchens &
with or without daily housekeeping services, provided by Hotels, INN, Guest houses, Clubs & other similar
establishments on a single or multi occupancy basis, for purposes of leisure or business or others.

This service code does not include:

– accommodation services at recreational and vacation camps, cf. 996313

– accommodation services for students in student residences, cf. 996321

– accommodation services in workers hostels or camps, cf. 996322

9972 Real estate services

99721 Real estate services involving owned or leased property

997211 Rental or leasing services involving own or leased residential property

This service code includes rental or leasing services concerning residential properties by owners or lease
holders’ houses, flats, apartment buildings, multiple-use buildings that are primarily residential, residential
mobile home sites.
This service code does not include:

– accommodation services provided by operating hotels, motels, rooming houses, school dormitories,
camp sites and other lodging places, cf. 99631

Income Tax Act, 1961 – Source based Theory & TDS applicability

Income from house property under Income Tax Act ,1961

Extracts from the Income Tax Statute…

Section 22

The annual value of property consisting of any buildings or lands appurtenant thereto of which the assessee is
the owner, other than such portions of such property as he may occupy for the purposes of any business or
profession carried on by him the profits of which are chargeable to income-tax, shall be chargeable to income-
tax under the head “Income from house property”.

Rent. – Rent paid under the head Profits and Gains of Business or Profession – TDS applicable to
specified persons only when such rent exceeds Rs.240000/- per annum

Section 194-I. Any person, not being an individual or a Hindu undivided family, who is responsible for paying
to a resident any income by way of rent, shall, at the time of credit of such income to the account of the payee
or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever
is earlier, deduct income-tax thereon at the rate of—

(a) two per cent for the use of any machinery or plant or equipment; and

(b) ten per cent for the use of any land or building (including factory building) or land appurtenant to a
building (including factory building) or furniture or fittings:

Provided that no deduction shall be made under this section where the amount of such income or, as the case
may be, the aggregate of the amounts of such income credited or paid or likely to be credited or paid during
the financial year by the aforesaid person to the account of, or to, the payee, does not exceed two hundred and
forty thousand rupees:

Provided further that an individual or a Hindu undivided family, whose total sales, gross receipts or turnover
from the business or profession carried on by him exceed [one crore rupees in case of business or fifty lakh
rupees in case of profession] during the financial year immediately preceding the financial year in which such
income by way of rent is credited or paid, shall be liable to deduct income-tax under this section:

Provided also that no deduction shall be made under this section where the income by way of rent is credited
or paid to a business trust, being a real estate investment trust, in respect of any real estate asset, referred to in
clause (23FCA) of section 10, owned directly by such business trust.

Explanation.

1. “rent” means any payment, by whatever name called, under any lease, sub-lease, tenancy or any other
agreement or arrangement for the use of (either separately or together) any, —
a. land; or
b. building (including factory building); or
c. land appurtenant to a building (including factory building); or
d. machinery; or
e. plant; or
f. equipment; or
 g. furniture; or
h. fittings,

whether or not any or all of the above are owned by the payee;

2. where any income is credited to any account, whether called “Suspense account” or by any other name,
in the books of account of the person liable to pay such income, such crediting shall be deemed to be
credit of such income to the account of the payee and the provisions of this section shall apply
accordingly.

Payment of rent by certain individuals or Hindu undivided family. – House Rent payable in excess of
Rs.50000 per month

194-IB. (1) Any person, being an individual or a Hindu undivided family (other than those referred to in the
second proviso to section 194-I), responsible for paying to a resident any income by way of rent exceeding
fifty thousand rupees for a month or part of a month during the previous year, shall deduct an amount equal
to five per cent of such income as income-tax thereon.

(2) The income-tax referred to in sub-section (1) shall be deducted on such income at the time of credit of
rent, for the last month of the previous year or the last month of tenancy, if the property is vacated during the
year, as the case may be, to the account of the payee or at the time of payment thereof in cash or by issue of a
cheque or draft or by any other mode, whichever is earlier.

(3) The provisions of section 203A shall not apply to a person required to deduct tax in accordance with the
provisions of this section.

(4) In a case where the tax is required to be deducted as per the provisions of section 206AA such deduction
shall not exceed the amount of rent payable for the last month of the previous year or the last month of the
tenancy, as the case may be.

Explanation. “rent” means any payment, by whatever name called, under any lease, sub-lease, tenancy or
any other agreement or arrangement for the use of any land or building or both.

Wealth Tax Act, 1957 – Extracts

Section 2 definitions

(ea.) “assets”, in relation to the assessment year commencing on the 1st day of April, 1993, or any subsequent
assessment year, means—

Any building or land appurtenant thereto (hereinafter referred to as “house”), whether used for residential or
commercial purposes or for the purpose of maintaining a guest house or otherwise including a farm house
situated within twenty-five kilometers from local limits of any municipality (whether known as Municipality,
Municipal Corporation or by any other name) or a Cantonment Board, but does not include—

(1) a house meant exclusively for residential purposes and which is allotted by a company to an employee
or an officer or a director who is in whole-time employment, having a gross annual salary of less than
[ten] lakh rupees
(2) any house for residential or commercial purposes which forms part of stock-in-trade;
(3) any house which the assessee may occupy for the purposes of any business or profession carried
on by him;
(4) any residential property that has been let-out for a minimum period of three hundred days in
the previous year;
(5) any property in the nature of commercial establishments or complexes;
Considering the above background, the following points of practical reality can emerge:

• Property is let out/given by the landlord to the Tenant who may be Registered or Unregistered under
the provisions of GST Act, 2017 only for Residential Purpose;
• Tenant who is occupying such property is using only for the purpose of Residence, and is not claiming
such rent as business expenditure u/s 30 of the Income Tax Act 1961 & as contemplated and envisaged
under the provisions of Section 28 of the Income Tax Act, 1961.
• Landlord ostensibly must be showing such rental income as Income from House Property under section
22 of the Income Tax Act, 1961 and paying the appropriate taxes as applicable as per the provisions
of the Income Tax Act 1961.
• Tenant who is registered under the provisions of GST Act, 2017 may or may not be registered for the
same premises which are registered under the provisions of the GST Act, 2017.
• Such Rent can be paid from personal funds or it can be paid from business earnings, it won’t make any
difference as long as such rent is not claimed as business expenditure by the Tenant u/s 30 of the
Income Tax Act 1961.
• Tenant must be rightfully deducting TDS u/s 194IA of the Income Tax Act, 1961 @ 5% of Rent paid
if applicable by depositing TDS as applicable by filing Form 26QC and issuin g Form 16IC to the
landlord for such TDS deducted.
• Tenant may be deducting TDS u/s 194I of the Income Tax Act, 1961 @ 10% of the rent paid by
depositing TDS as applicable by filing Form 26Q and issuing Form 16A to the landlord for such
TDS deducted, in that case RCM levy would be triggered as per the Notification No 05/2022
dated July 13, 2022.

House rent payable on or after July 18,2022 in the following illustrative scenarios:

Often used abbreviations are stated below:

Unregistered Person – URP (Employees, Flat/Property Owners Business man, Students, Professionals etc.)

Registered Person – RP (Flat/Property Owners, Business man, Students, Professionals etc.)

R – Residential Purpose only

NR- Non-Residential or Commercial or Partly Residential & partly commercial

RCM – Reverse Charge mechanism as per the provisions of GST Act, 2017

FCM – Forward Charge mechanism as per the provisions of GST Act, 2017.

This service code includes rental or leasing services concerning residential properties by owners or lease
holders’ houses, flats, apartment buildings, multiple-use buildings that are primarily residential, residential
mobile home sites.

This service codes do not include:

– accommodation services provided by operating hotels, motels, rooming houses, school dormitories, camp
sites and other lodging places, cf. 99631
 Property given on rent for Residential Purposes only

Situation GST and Income Tax Implications

URP gives his residential property on monthly rent for residential No GST applicable or payable as both the parties are
purpose to URP as per the provisions of the GST Act, 2017 viz. unregistered under the provisions of GST Act, 2017
Businessman, Salaried Employee Owner etc.
No GST would be payable even under this scenario as
he is not claiming such rent paid as business
Property Given on Rent where rent payable is less than
expenditure u/s 30 of the Income Tax Act, 1961 & as
Rs.50,000/- per month
contemplated & envisaged as per Section 28 of the
Income Tax Act, 1961.
URP/RP gives his residential property/ties on monthly rent for
residential purpose to RP as per the provisions of the GST Act,
2017 who is paying rent less than Rs.50000 per month. Landlord has to show such rental income as Income
from House Property u/s 22 of the Income Tax Act
1961.
No GST would be payable even under this scenario
because such Registered Person is not claiming such
rent as business expenditure u/s 30 of the Income
Property Given on Rent where rent payable is more than Tax Act 1961 & as contemplated & envisaged as per
Rs.50,000/- per month Section 28 of the Income Tax Act, 1961 & even he
could be depositing TDS u/s 194IA of the Income
URP /RP gives his residential property/ties on monthly rent for Tax Act, 1961 @ 5%, filing Form 26QC and issuing
residential purpose to RP as per the provisions of the GST Act, Form 16C as specified under Income Tax Rules.
2017 who is paying rent of more than Rs.50000 per month
Landlord has to show such rental income as Income
from House Property u/s 22 of the Income Tax Act
1961.
GST would be payable by the Recipient viz. Tenant
as such rent would be termed as business
expenditure u/s 30 of the Income Tax Act 1961 & as
contemplated & envisaged as per Section 28 of the
Income Tax Act, 1961, TDS would be deducted u/s
194I of the Income Tax Act, 1961 @ 10% by
depositing in Form 26Q and issuing Form 16A as
specified under Income Tax Rules.

Property Given for House Rent Accommodation In cases of Employees to whom such property is
provided for their residential purposes, the Employer
URP/ RP gives his residential property/ties on monthly rent for may be recovering such dues or Employer may be
residential purpose to RP who in turn is providing the property to treating the same as perquisite u/s 17 of the Income
his employees for residential use as per terms of employment- Tax Act, 1961 and deducting appropriate TDS u/s
whether mandatory or non-mandatory under any other provisions 192B of the Income Tax Act 1961 as per the provisions
as applicable to such registered persons. (House Rent of Chapter XVII-B of the Income Tax Act 1961 and if
Accommodation as perquisites provided by the Employer) not treated as perquisite, then such benefit or perquisite
may be taxed u/s 194R of the Income Tax Act, 1961
as per terms and conditions specified therein.

Non-compliance of TDS provisions under the Income

Tax Act, 1961 may trigger disallowances u/s 40(a)(ia)
of the Income Tax Act, 1961 & Taxpayer may be
termed as assessee in default u/s 201 of the Income
Tax Act, 1961.
 GST would be payable by the Recipient under
RCM on guest house rent paid because such rent
would be termed as business expenditure u/s 30 of
the Income Tax Act 1961 & as contemplated &
envisaged as per Section 28 of the Income Tax Act,
1961, TDS would be deducted u/s 194I of the Income
Tax Act, 1961 @ 10% by depositing in Form 26Q and
issuing Form 16A as specified under Income Tax
Rules.
Property given for Guest House
Such benefit or perquisite may be taxed u/s 194R of
the Income Tax Act, 1961 as per terms and conditions
URP/RP gives his residential property/ties on monthly rent as a
specified.
guest house to RP who in turn may be using the same for the
benefits of his staffs/visitors/client/vendors etc. for their
temporary residential requirements, considering the necessity as GST paid under RCM may be claimed as ITC subject
to terms and conditions of Section 16 & Section 17 by
well as by reason of furtherance of business.
the Registered person.

Non-compliance of TDS provisions under the Income

Tax Act, 1961 may trigger disallowances u/s 40(a)(ia)
of the Income Tax Act, 1961 & Taxpayer may be
termed as assessee in default u/s 201 of the Income
Tax Act, 1961.

Landlord has to show such rental income as Income

from House Property u/s 22 of the Income Tax Act
1961.
Director/Partner needs to get himself under the
provisions of GST Act, 2017 as there is no threshold
limit exemption for RCM supplies especially w.e.f
July 18, 2022, such service is considered as exempt
supply as per section 2(47) of CGST Act, 2017. Thus,
if not registered, then post registration either of them
needs to comply with all provisions as applicable as
specified under the GST Acts, 2017.

If Company/Firm is registered, then, it may claim the

Some specific situations
benefit of ITC as per the terms and conditions
specified u/s 16 & 17 of CGST Act, 2017.
Director of the Company giving his flat on rent to the company
(listed/closely held/unlisted/LLP). Provisions of perquisite valuation u/s 17 for TDS
deduction u/s 192B of the Income Tax Act, 1961 or
Partner of the Flat giving his flat on rent to the Firm/LLP & benefit or perquisite u/s 194R of the Income Tax Act
company (listed/closely held/unlisted etc.). 1961 under u/s 28 of the Income Tax Act,1961 need to
comply.

Non-compliance with TDS provisions under the

Income Tax Act, 1961 may trigger disallowances u/s
40(a)(ia) of the Income Tax Act, 1961 & Taxpayer
may be termed as Assessee in default u/s 201 of the
Income Tax Act, 1961.

Director/Partner will offer such income to tax under

the head Income from House Property u/s 22 of the
Income Tax Act, 1961.
 If such is case then GST won’t payable under RCM as
House rent paid in advance prior to July 18,2022 or House rent Time of supply is triggered before the applicability of
paid upfront prior to July 18,2022 the provisions w.e.f July 18,2022.

Views as discussed may be suitably applied

House rent paid to Non-Resident Landlord considering the facts of each scenario.

There are divergent views but in my opinion ,

transaction would be termed as inter-state supply
transaction & if GST is applicable, then IGST would
be leviable under FCM @18 % or payable under RCM
@ 18% as the case may be but provisions as
House rent paid to Landlord located in a place other than the place applicable for Hotel accommodation for levy as intra-
where property is located Say Property located in Mumbai and state supply viz. CGST @9% + SGST @9% can’t be
Landlord located in Delhi. made applicable to the transaction of rent payable for
the housing property especially considering POS u/s
2(86), POS provisions u/s 12, Location of Recipient of
Services u/s 2(14) & usual place of residence u/s
2(113) of the CGST Act 2017.

Transaction would be termed as intra state supply &

House rent paid to Landlord located in the same place where depending on the facts of the transactions GST would
property is located say Property located in Mumbai and Landlord be leviable under FCM @18 % or payable under RCM
is also located in Mumbai. @ 18% as the case may be viz. CGST @9% + SGST
@9%
Property given for Non-Residential Purposes or Commercial Purposes or Partly Residential & Partly
Commercial Purposes

Situation GST and Income Tax Implications

Such URP would be liable to register under the provisions

of GST Act, 2017 as applicable and after registration such
person needs to comply with all the provisions of the GST
Act, 2017.

Post registration such person needs to charge GST @ 18%

as applicable to the Recipient.

If GST is charged by Landlord, then it would be additional

cost for the tenant if such terms and conditions are provided
URP gives his residential property on a monthly rent for a in the leave and license agreement. If not provided, then it
non-residential purpose or commercial purpose or partly would be cost in the hands of landlord.
residential and partly commercial purposes to URP as per
the provisions of the GST Act, 2017 viz. Businessman, TDS (if applicable) would be deducted u/s 194I of the
Salaried Employee Owner etc. Income Tax Act, 1961 @ 10% by depositing in Form 26Q
and issuing Form 16A as specified under Income Tax
Rules.

Non-compliance of TDS provisions under the Income Tax

Act, 1961 may trigger disallowances u/s 40(a)(ia) of the
Income Tax Act, 1961 & Taxpayer may be termed as
assessee in default u/s 201 of the Income Tax Act, 1961.

Landlord has to show such rental income as Income from

House Property u/s 22 of the Income Tax Act 1961.

Such RP would be liable to charge GST @ 18% under

FCM.

If GST is charged by Landlord, then depending on the

conditions and stipulations as per the provisions of Section
16 & Section 17, Registered person may claim ITC as per
the provisions of GST Act, 2017.

RP may need to consider the provisions of Rule 42/43 of

RP gives his residential property on monthly rent for a non- CGST Act, 2017 for reversing ineligible credits as per the
residential purpose or commercial purpose or partly provisions of the Act.
residential and partly commercial purposes to RP as per the
provisions of the GST Act, 2017 viz. Businessman, Salaried TDS (if applicable) would be deducted u/s 194I of the
Income Tax Act, 1961 @ 10% by depositing in Form 26Q
Employee Owner etc. and issuing Form 16A as specified under Income Tax
Rules.

Non-compliance of TDS provisions under the Income Tax

Act, 1961 may trigger disallowances u/s 40(a)(ia) of the
Income Tax Act, 1961 & Taxpayer may be termed as
assessee in default u/s 201 of the Income Tax Act, 1961.

Landlord has to show such rental income as Income from

House Property u/s 22 of the Income Tax Act 1961.
 Such RP would be liable to charge GST @ 18% under
FCM.

Composition Dealer as recipient won’t be eligible to claim

the benefit of ITC u/s 16 & 17 of CGST Act, 2017 as they
are not entitled to claim such benefits.
Property given on rent to Composition Dealer
TDS (if applicable) would be deducted u/s 194I of the
RP gives his residential property on monthly rent for a non- Income Tax Act, 1961 @ 10% by depositing in Form 26Q
residential purpose or commercial purpose or partly and issuing Form 16A as specified under Income Tax
residential and partly commercial purposes to RP who is Rules.
registered as composition dealer u/s 10 of the CGST Act,
2017 viz. Businessman, Salaried Employee Owner etc. Non-compliance of TDS provisions under the Income Tax
Act, 1961 may trigger disallowances u/s 40(a)(ia) of the
Income Tax Act, 1961 & Taxpayer may be termed as
assessee in default u/s 201 of the Income Tax Act, 1961.

Landlord has to show such rental income as Income from

House Property u/s 22 of the Income Tax Act 1961.

Director/Partner needs to charge GST under FCM by

registering himself if applicable under the provisions of the
GST Act, 2017, if not registered till now and comply with
all provisions as applicable as specified under the GST
Acts, 2017.

If Company/Firm is registered, then, it may claim the

benefit of ITC as per the terms and conditions specified u/s
Some specific situations
16 & 17 of CGST Act, 2017.

Director of the Company giving his flat on rent to the Provisions of perquisite valuation u/s 17 for TDS deduction
company (listed/closely held/unlisted/LLP). u/s 192B of the Income Tax Act, 1961 or benefit or
perquisite u/s 194R of the Income Tax Act 1961 under u/s
Partner of the Flat giving his flat on rent to the 28 of the Income Tax Act,1961 needs to be complied.
Firm/LLP & company (listed/closely held/unlisted etc.).
Non-compliance of TDS provisions under the Income Tax
Act, 1961 may trigger disallowances u/s 40(a)(ia) of the
Income Tax Act, 1961 & Taxpayer may be termed as
assessee in default u/s 201 of the Income Tax Act, 1961.

Director/Partner will offer such income to tax under the

head Income from House Property u/s 22 of the Income Tax
Act, 1961.

Such supply is always chargeable to GST levy under FCM

mechanism only whether such supply is made by RP/URP.
Letting out of Property for Commercial Properties
If one is not registered, then one needs to register as per the
provisions of GST Act, 2017 as applicable.