GST Rate Cuts: The recent decision to cut GST rates has given relief to people in some cases, but at the same time, due to the new rules, there may be an additional burden on traders and businessmen. According to a report, some changes are especially related to commercial property and rent.
Big change in rules
Under the new rules of GST, hopes have definitely been raised regarding the availability of affordable houses, but if you are running a shop or office on rent, then this change is necessary for you.
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Reverse charge mechanism implemented
According to ANAROCK Real Estate Consultancy, the Reverse Charge Mechanism (RCM) has now been implemented. This means that in some cases, the person paying the rent will now have to pay 18% GST, not the property owner.
Tenant will have to pay GST
If the person from whom you are renting a shop or office is not GST registered, then the person paying the rent (tenant) will have to deposit the GST amount.
Pressure of compliance will increase
Earlier, the responsibility of GST was always on the property owner. But after this change, tenants and traders will now have to file GST returns and complete other processes themselves, which will increase the burden of compliance.
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Input tax credit ended
Another important change related to commercial real estate is that now input tax credit will not be available on the leasing of commercial property. That is, now developers will not be able to claim credit for the tax paid on those expenses that are related to the cost of the project.
Office rent may become expensive
Due to this rule, the operational cost of developers will increase, which may affect the rent of office space in the future. That is, taking commercial space may become expensive in the coming time.