EXAMPLE-67  

Mr. X owned a building. Basement of which is leased to Mr. A for godown for storing his goods for the purpose of business. Ground floor of the building is given on rent to Mr. B, who uses the same for residential purpose for him and his family. First floor is given on rent to Mr. C, who uses the same as guest house for his business contacts. Second floor is occupied by Mr. X for his residence. There is a vacant land in the backyard of the building which is also given on rent to Mr. D, who has set up a parking facility on the said land.

A separate rent/lease deeds have been executed in respect of each floor and vacant land.  

Examine GST liability of Mr. X with respect to his  residential building owned by him.

 Answer

 Renting of residential building for the use of residential house is covered under exemption list under GST, so not taxable.  Otherwise renting of immovable property is defined as supply of services under schedule II of GST.  

Schedule II of GST Act specifies:-

Land and Building  

(a) any lease, tenancy, easement, licence to occupy land is a supply of services;

(b) any lease or letting out of the building including a commercial, industrial or residential complex for business or commerce, either wholly or partly, is a supply of services.  

As the separate rent deed has been made for renting of residential building i.e. basement and different floors, thus, this supply is not covered under composite supply.

In view of above provision taxability of renting in respect of different floor and vacant land under GST will be as follows:-  

Vacant land – Renting of vacant land used for a commercial purpose is taxable according to Schedule II.

Basement: - Section 7 of CGST Act covers renting, leasing under scope of supply. Schedule II of GST Act specifies that any lease or letting out of the building including a commercial, industrial or residential complex for business or commerce, either wholly or partly, is a supply of services. Thus renting of basement for commercial purpose is taxable under GST as Supply of services.  

Ground floor: - Ground floor given on rent for the purpose of residence is covered under exemption list , Thus not taxable under GST.  

First floor: - Since Mr. C uses the same for guest house for the purpose of business, thus, taxable under GST as supply of services.  

Second floor: - Not taxable, as used by Mr. X for his own residential purpose.