Using Residential Property for Business Purposes is Exempt from GST

  • Setindiabiz Team
  • October 1, 2023
Residential Property for Business Purposes
Interpreting a notification issued by the government on 13th July, 2022, the Delhi High Court held that, an owner of a registered proprietorship firm, renting a residential property in his personal name and using it in his personal capacity, from now on, will be exempt from paying GST with the rent payment of the property.
The judgment will not be applicable if the property is rented in the name of the proprietorship firm or is being used for furthering the cause of the business.

The Judgment

The petitioner, Ms. Seema Gupta, had challenged the notification discussed earlier in the Delhi High Court, arguing that it was violating Article 14 of the Indian Constitution, or the Right to Equality, among property rentals. The petitioner, thus requested the court to declare the notification as ultra vires.
The petitioner had further asserted that, the exemption offered by an earlier notice issued on 28th July 2017 which granted GST exemption to rented residential properties, will no longer be applicable to dwellers who have obtained GST registration, as stated by the notification issued on the13th of July 2022. For the petitioner, this discriminated against GST registered residential dwellers with dwellers that do not have GST registration. In addition, this particular change has impacted individuals who function as a sole proprietor, such as the Petitioner herself. The denial of exemption, only on the premise that the tenant is not registered under GST, did not seem logical and relevant to the petitioner.
The official twitter handle of PIB stated on Friday, that the renting of residential units will only be taxable, if it is rented by a business entity, and not if it is rented in the personal capacity.
In response to queries by the media, whether registered tenants are required to pay the GST, the Twitter handle confirmed that no GST will be levied on tenants having GST registration, if the property is rented in the name of a private individual, and is being used in a personal capacity.”

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