In a major clarification, the Centre has said that GST will not be applicable on residential units if they are rented out to private persons for personal use. The clarification came in response to media reports claiming that there is an 18 percent Goods & Services Tax (GST) on house rent paid by tenants. The central government has made it clear that the GST would be levied only when the residential unit is rented out to a business entity. On the other hand no GST is to be charged if it is rented out to a private individual for personal use or if the proprietor or partner of a firm rents residence for personal use.
The clarification comes as a relief to GST- registered proprietors or partners in GST- registered firms who take on rent immovable property for their personal use such as renting a house for family accommodation.