GST on Rent – When Property Has Joint Owners

🏢 GST on Rent – When Property Has Joint Owners

When two or more persons jointly own a commercial property, GST implications depend on whether they are treated as separate suppliers or as an association of persons (AOP) under the GST Act.

Let’s look at both scenarios clearly:

1️⃣ Separate Owners (Most Common Case)

If each joint owner:

  • Receives rent separately, and

  • Has a separate agreement with the tenant, and

  • Their individual rental income share is below ₹20 lakh per year,

➡️ Then each joint owner is treated as a separate supplier under GST.

✅ GST registration is NOT required for any joint owner whose individual share of rent is below ₹20 lakh per year (₹10 lakh in special category states).

Example:
A commercial property is owned jointly by A and B.

  • Total rent: ₹60 lakh per year

  • A’s share: ₹30 lakh (50%)

  • B’s share: ₹30 lakh (50%)

If A and B receive rent separately, each exceeding ₹20 lakh → both must register and charge GST on rent.
If each receives ₹15 lakh → no GST registration needed.

2️⃣ Treated as an Association of Persons (AOP)

If:

  • The joint owners act collectively, and

  • The rent is received jointly (e.g., a single rent agreement and one payment to a joint account),

➡️ Then the total rental income is considered together, and the AOP is treated as the supplier.

If total rent exceeds ₹20 lakh per year,
✅ The AOP must register for GST and pay GST on the full amount.

🔍 Summary Table

Scenario Who is Supplier? Threshold Calculation GST Registration Required?
Each owner receives rent separately Each owner Individually (per owner) Only if that owner’s share > ₹20L/year
Owners receive rent jointly in one account AOP (collective entity) Combined total rent If total rent > ₹20L/year

💡 Practical Tip:

To avoid confusion, it’s best for joint owners to:

  • Have separate lease agreements (if possible), or

  • Clearly specify each owner’s share in the agreement and rental receipts.

This ensures individual GST threshold is applied correctly.


Comments

Post a Comment

Popular posts from this blog

Capital Gains Tax on Sale

  1. Capital Gains Tax on Sale of House Property vs. Land Criteria House Property (Building & Land) Vacant Land (Plot of Land) Holding Period for LTCG More than 24 months (Long-Term) More than 24 months (Long-Term) Holding Period for STCG ≤ 24 months (Short-Term) ≤ 24 months (Short-Term) STCG Tax Rate As per Slab Rate As per Slab Rate LTCG Tax Rate 20% with Indexation 20% with Indexation Indexation Benefit ✅ Available ✅ Available Exemptions Available Section 54 (Reinvestment in house) & Section 54EC (Bonds) Only Section 54F (Reinvestment in house) & Section 54EC (Bonds)   🔹 Key Difference in Exemptions House Property: Eligible for Section 54 , allowing reinvestment in another re...
Read more

Purpose Codes for Export Transactions

Purpose Codes in detail — especially P0104 (Export of goods) — which are required for foreign remittances under FEMA/RBI regulations. 🏦 1. What is a Purpose Code? A Purpose Code is a standardized code prescribed by the Reserve Bank of India (RBI) to identify the nature of a cross-border transaction — whether it’s for exports, imports, services, loans, investments , etc. These codes are used by Authorized Dealer (AD) Banks to report every foreign exchange transaction to the RBI through: EDPMS (Export Data Processing and Monitoring System) for exports, and IDPMS (Import Data Processing and Monitoring System) for imports. 🌍 2. Purpose Codes for Export Transactions When you receive a foreign inward remittance against an export, your AD Bank must enter the correct Purpose Code while reporting the transaction. Here are the most common export-related purpose codes 👇 Purpose Code Description (as per RBI) Used For P0104 Export of goods For physical ex...
Read more

What Is Incriminating Material in Income Tax Law?

  What Is Incriminating Material in Income Tax Law? Incriminating material refers to any document, record, statement, digital evidence, or seized item during a search or survey that directly indicates undisclosed income, transactions, or assets of the taxpayer, and can justify an addition in assessment or reassessment. 📚 Judicially Recognized Definition “Incriminating material” is any evidence unearthed during a search which: Relates to a specific assessment year , and Reveals income not disclosed in the original return or books of account 📂 Examples of Incriminating Material Type Examples 💵 Cash / Jewellery Unexplained cash or jewellery without proper source 📝 Documents Unaccounted invoices, promissory notes, loan ledgers 🖥️ Digital evidence Files/emails showing black money, hawala, or bogus transactions 📒 Books of account Parallel books of accounts 📄 Agreements Benami transactions, property undervaluation 💼 Diaries / slips Unrecorded business transac...
Read more