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Case Study on GST liability for letting Commercial property in India by a Non Resident

Mr. A being a NRI staying in USA for the last 20 years is having a commercial property in Delhi, India. He leased out the said property in December, 2019 for a monthly rent of Rs. 5,00,000/- He don’t have any other income also don’t have any residence in India.

Query of Mr. A:

  1. Whether he is liable to register in India under GST?
  2. If yes, whether he required to take GST registration as a regular taxable person or as a Non-Resident Taxable Person?

Answer:

  1. As per Section 22 of CGST Act, Every supplier shall be liable to registered under this Act in the state, from where he makes a taxable supply of goods or services or both, if his aggregate turnover in a financial year exceeds Rs. 20 lacs.
  2. As per Section 2(108) of CGST Act, Taxable supply means a supply of goods or services or both which is leviable to tax under this Act.
  3. As per Section 7(1) of CGST Act, supply includes all forms of supply of goods or services or both such as transfer, barter, exchange, license, rental, lease, or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business.
  4. According to Section 7(1A) read with Schedule II {para 2, clause (b)}, any lease or letting out of building including a commercial, industrial or residential complex for business or commerce is supply of services.
  5. Based on the above provisions, we can say that he is liable to be register in Delhi (India) under GST, because he fulfils all of the above conditions.
  6. As per Section 2(77) of CGST Act, Non-resident taxable person” means any person who occasionally undertakes transactions involving supply of goods or services or both, whether as principal or agent or in any other capacity, but who has no fixed place of business or residence in India.
  7. In this case Mr. A being a Non-resident person does not supply services occasionally rather he provides rental service as a regular service. So he is liable to be register as a regular taxable person not as a NRTP even if he has no residence place in India because such commercial property in Delhi will be considered as his fixed place of business in India.

To Conclude:

  1. Yes, Mr. A is liable to register in India under GST based on point 1 to 5 above.
  2. He is required to take registration as a regular taxable person based on point 6 to 7 above.

(Disclaimer: This content is meant for our clients or professional friends only for stimulating discussion on the subject matter not to frame any commercial opinion. All efforts are made to compile correctly with no guarantee of extreme accuracy)

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