The GST Council has introduced a Reverse Charge Mechanism (RCM) for commercial property rentals starting September 9, 2024. This means tenants, not landlords, will be responsible for paying GST on rentals from unregistered suppliers. The GST rate remains at 18%. The Council also clarified that Preferential Location Charges (PLC) will be taxed the same as main construction services.

This change aims to improve compliance and reduce revenue leakage.

Impact on Tenants:

For businesses renting commercial properties, this means an added layer of compliance, with tenants needing to manage GST payments themselves. Tenants must ensure accurate GST filings and payments, as non-compliance could result in penalties. Additionally, the clarification on Preferential Location Charges (PLC) being taxed at the same rate as construction services is essential for those dealing with premium real estate offerings.


Compliance Tips:

  • Ensure they are registered under GST to handle RCM.
  • Maintain clear records of rental agreements and invoices.
  • Regularly check for updates on GST regulations to stay compliant.

This change is expected to increase GST compliance across the industry, impacting businesses renting commercial properties. At Amar Builders, we stay informed about these shifts to better advise our tenants and partners, ensuring that all are equipped to navigate the evolving tax landscape.

Source : https://www.business-standard.com/amp/finance/news/rcm-on-commercial-rentals-may-raise-gst-revenue-burden-tenants-experts-124091001044_1.html
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