Renting residential property for residential purpose to a company is exempt supply not liable to GST

Renting a residential property for residential purpose to a company is an exempt supply not liable to GST

ABCAUS Case Law Citation:
ABCAUS 3038 (2019) (06) AAR

The Applicant was inter alia renting dwelling units. He sought a ruling gtpm the GST Authority for Advance Ruling (AAR) on whether the supplier was liable to pay GST on such supply even if the recipient is using the dwelling unit for residential purpose.

The Applicant, had executed agreements for leasing/renting of four dwelling units it owned at different locations in the city. According to the agreements, all of these units were to be used for residential purpose.

Three flats/units had been rented to individuals and one flat had been let out to a Public Ltd. Company Ltd. It was the submission of the applicant that he was not liable to pay tax on leasing or renting of these dwelling units, as they were all let out for residential purpose, and services by way of renting of dwelling units for residence is exempted under Sl No. 12 of Notification No. 12/2017-CT (Rate) dated 28/06/2017 and the corresponding State Notification.

The AAR observed that the dwelling units rented to individuals were meant for residential accommodation. The dwelling unit rented to the company was a flat in a housing complex. The Apartment Owners’ Association certified that the applicant owns the flat and it was a residential flat and could not be used for any other purpose. The said association further confirmed that an employee of the said company was staying at the flat.

The AAR opined that the applicant’s service was classifiable as rental or leasing service involving own/leased residential property (SAC 997211). Applicability of Sl No. 12 of the Exemption Notification depends upon whether the dwelling unit was used as residence. In the instant case, the dwelling units were being used for residence, irrespective of whether they were let out to individuals or a commercial entity. Therefore, the applicant’s service of renting/leasing out the dwelling units for residential purpose was exempt under Sl No. 12 of the Exemption Notification.

Accordingly, the AAR ruled that the applicant’s service of renting/leasing out the dwelling units for residential purpose was exempt under Sl No. 12 of Notification No. 12/2017-CT (Rate) dated 28/06/2017 and the corresponding State Notification as amended from time to time. The Applicant was , therefore, not liable to pay tax on supply of such service.

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