QUESTION

Mr. X who is an not registered under GST gives a floor of his house on rent to a person who is registered.

Answer

Facts of the case: Mr X not registered under GST gives a floor of his house on rent to a registered person for office use. Is there is any chargeability of GST.

Law Applicable: SECTION 22 OF CGST ACT

(1) Every supplier shall be liable to be registered under this Act in the State or Union territory, other than special category States, from where he makes a taxable supply of goods or services or both, if his aggregate turnover in a financial year exceeds twenty lakh rupees

Notification No. 12/2017- Central Tax (Rate)

Interpretation: Section 22 of CGST Act requires registration of a person when his aggregate turnover in a financial year exceeds Rs. 20 lakhs.
The aggregate turnover is defined in Section 2(6) as follows:

'aggregate turnover' means the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis), exempt supplies, exports of goods or services or both and inter-State supplies of persons having the same Permanent Account Number, to be computed on all India basis but excludes central tax, State tax, Union territory tax, integrated tax and cess;

In view of above if the aggregate turnover exceeds Rs. 20 lakhs, then you are required to take registration under GST.

Notification No. 12/2017- Central Tax (Rate) exempts only renting of residential dwelling for use as residence, therefore renting of Residential premises for commercial purposes is subjected to GST.

Further Rental of premises is not covered under reverse charge, so the receiver of service (tenant) is not supposed to pay tax. The landlord is liable to charge tax.

Conclusion: If turnover of Mr X exceeds 20 lakhs then he will be liable for registration.
Since Rental of premises is not covered under reverse charge, so the receiver of service (tenant) is not supposed to pay tax. Mr X is liable to charge tax. So far as ITC is concerned tenant will be eligible to avail ITC subject to conditions of Section 16(2).(Reply dt.11-07-2020)