9. Conclusion
GST RCM on Rent is applicable on the commercial rent of unregistered landlords, which aims to prevent tax evasion. Business owners should make GST compliant keeping in mind the registration status of the landlord. Proper calculations, timely payments, and accurate return filing can help you protect your business from penalties and maintain legal compliance. If necessary, consult your GST consultant.
FAQs on GST RCM on Rent
Q1. Is GST RCM applicable on residential property rent?
Nope. GST is exempt on residential property rent, so whether the landlord is registered or unregistered, RCM is not applicable. This exemption is mainly for personal residential use, but if the same property is being used for commercial purposes, then GST may be applicable.
Q2. What is the GST rate on commercial property rent?
Commercial property rents generally attract 18% GST (9% CGST + 9% SGST). This rate is the same in both cases, whether it is RCM or normal GST.
Q3. Will RCM be applicable if the landlord is GST registered?
Nope. If the landlord is GST registered, he will charge GST on his rent and RCM will not be applicable. In this case, GST is collected through the landlord and deposited to the government.
Q4. Do unregistered landlords have to pay GST?
Unregistered landlord does not collect GST. But if the recipient is registered, then it is the responsibility of that recipient to pay GST under RCM.
Q5. Can I claim GST Input Tax Credit (ITC) under RCM?
Yes. If you are a registered taxpayer and are being used for rent business, then you can claim GST paid in RCM as ITC.
Q6. How to pay GST on RCM?
Under RCM, GST is paid directly to the government through GSTR-3B. Only after payment, you can claim ITC.
Q7. Is TDS also applicable on rent under RCM?
Yes. Both TDS and GST are different compliances. If TDS on rent is applicable, TDS will have to be deducted whether RCM is applicable or not.
Q8. What is the threshold limit for GST RCM on Rent?
The rule of threshold limit is not applicable on RCM. Meaning, whether it is a small amount or a big amount, if the conditions are met, then RCM is applied.
Q9. How is RCM reported in GST returns?
RCM transactions have to be mentioned in the correct column in GSTR-1 and GSTR-3B. GSTR-3B requires tax liability to be paid and ITC to be claimed.
Q10. What happens if RCM GST is not paid on time?
If you pay GST late, you may have to pay both interest (per month basis) and penalty. The interest rate is according to GST law, which is currently 18% per annum.