Impacts Of GST And TDS On Rental Income

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Impacts Of GST And TDS On Rental Income

tds and gst on rented home

Are you currently residing in a rental home? Then here is what you should know about the impact of GST and TDS on the rental income of your landlord. You surely won’t be willing to stay in a rental home after this!

It is known to all of that currently every real estate property has certain tax laws associated with it. That would be the ‘Income from House Property’. However, for every property that is out for rentals, there are indirect tax laws such as TDS of the lessee, service tax and the newly propositioned goods and service tax (GST) is also set to make a mark.

In the present times, the owner of a rental property is obligated to register for service tax. This case is only applicable if the total rental earnings and other incomes reach and exceed a total of 10 lakh rupees per year. Residential lands used for residential purposes are also exempted from this tax law.

How GST And TDS Make An Impact?

A huge change has been made in the current service tax method by the implementation of GST.

After its implementation, the limit for rental income has been increased to Rs.20 Lakhs from the earlier RS.10 Lakhs limit due to the addition of previously exempted goods and services charges. This means that most of the landlords are conveniently out of the service tax purgatory.

The Reverse Charge Mechanism of service tax regime is also modified in the reign of GST. In This scenario, A GST registered buyer is asked to pay GST if the authorised seller is an unregistered one.

The rent of a property, when exceeds the limit of 1.8 lakh rupees in a year, is subjected to 10% TDS from the lessee. This limit is applicable on the landowner and not the land. TDS applies to both the residential and commercial properties.

Renting a property would only mean fuelling up the incomes of a landlord. It is strongly encouraged to get a property of your own and then you will be able to enjoy the tax benefits as well.

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