GST EFFECT ON RENTING PROPERTY
MAHARASHTRA government is all set to increase house rents. From July 1, the state government will be treating renting as an immovable property as a service that will attract GST.
LEASING or sub-letting a property or a building or creating a tenancy or an easement right has been brought under the purview of GST. Granting someone license to occupy a property will also attract GST.
THE Maharashtra Assembly on Monday unanimously passed the State Goods and Services Tax (GST) ratification bill after hectic deliberations at a three-day special session of the state legislature.
THE assembly saw hectic discussions and ratification of three related GST bills, including the State Goods and Services Tax Bill, another to compensate the local authorities and the third to repeal the existing law and replace them with GST with effect from July 1.
ASSURING GST would not hamper financial autonomy of local bodies, Finance Minister Sudhir Mungantiwar said the new tax regime would help strengthen Maharashtra’s economy and eliminate the “tax terrorism” being faced by the people.
THE Opposition strongly objected the move of levying GST on rent and, arguing that the new provisions would further escalate housing prices in Mumbai and the rest of the state.
LEADER of Opposition in Maharashtra’s Legislative Council Dhananjay Munde even alleged that leasing of farm lands for agricultural and non-agricultural purposes had been brought under the ambit of the GST.
MUNDE also raised several concerns over loopholes in GST Bill. While sale of land and buildings has been kept out of the purview of GST, the government has defined sale of under-construction houses as a taxable service under the Act.
ALREADY facing heat from the Opposition over the farm loan waiver demand, Fadnavis clarified transactions for leasing or sub-letting agricultural land would attract zero duty in the new regime.
AT PRESENT, 15% service tax is levied on sub-leasing of commercial property, while renting or sub-leasing residential properties is generally exempt from service tax. Under GST, a tax rate up to 18% of the transaction value has been proposed.