RCM on Commercial Property Rent by Unregistered Person

Important Facts to Note:

Such Registered Recipient will raise Self Invoice u/s 31(3)(f) of the CGST Act.

Credit of GST paid under RCM by Such Registered Recipient, available if Commercial Property used in the course or furtherance of business for outward taxable Supplies. (Section 16(2) of the CGST Act read with Rule 36(1)(b) of the CGST Rules).
GST to be paid under RCM by Registered Person if Immovable Residential Property let out by unregistered person to registered person w.e.f July 18, 2022 | RCM on Commercial Property Rent by Unregistered Person”

But:

GST to be paid under Forward Charge – if Commercial Property let out by registered supplier to an unregistered recipient. No GST if Commercial Property is let out by unregistered supplier to unregistered recipient.

Impacts of RCM on Commercial Rent

1.  If the tenant is Unregistered and the owner is also Unregistered under GST is not applicable (Neither RCM nor FCM)

2.  If the tenant is Unregistered and the owner is Registered under GST is applicable on FCM basis

3. If the tenant is Registered and the owner is also Registered under GST is applicable on FCM basis

4. If the tenant is Registered and the owner is Unregistered under GST is applicable on RCM basis

5. If the tenant is Registered under GST as Composition tax payer then RCM liability will be an extra expense for him because he is not eligible for ITC

6. If the tenant is Registered under GST as Regular tax payer then he is eligible to claim RCM liability as ITC

     7. RCM liability compulsorily required to be paid through cash only

8. Applicable once the notification will be issued by Authorities