Can't understand your conern???
If person ‘A’ with under 20lac turnoever (not registered under GST) purchases from a GST registered vendor ‘B’ then ‘A’ ends up paying GST from his pocket without any scope of claiming it back. On the other hand registered traders end up claiming input tax credit so that they are basically just collecting and depositing tax without paying from their pockets. Is there no way around this injustice? Does the govt actually want that poorer people who are exempt from GST registration (literally because they are too poor to appoint CAs) should end up paying more GST from their own pockets??
Can't understand your conern???
If you want to avail Input Credit then you have to register yourself, You don't need to appoint CA for registering in GST. You can get it done through some small service providers, freelancers also if your turnover is really small.
Registered person has to pay the GST on the value addition made by him, whereas you don't have to. Registration is generally obtained only when you have to pass on the credit to your buyer, otherwise it doesn't have any effect .
GST is an indirect tax which means the burden of tax ultimately falls on the final consumer and not the people in the supply chain.
Thus, a dealer who is not a part of the supply chain will not be eligible to take the tax credit.
In this situation my property agent is charging 18% GST on his commission after arranging a new tenant for my shop. If I register under GST the tenant will have to pay me GST in addition to deducting and depositing TDS himself? The GST paid to property agent will be deductible from GST paid by tenant? If I continue to remain unregistered, my tenant will still have to pay GST under reverse charge mechanism (after March 2018 if RCM is re-instated)?
A) In case of unregistered dealer, GST paid on purchases would become the part of the cost of the product which will be recoverable form the customer.In this, dealer first paid GST from his own pocket and then afterwards recovered it from customer so final burden is on customer only.
B) In case of registered dealer, GST paid on purchases would take shape of ITC which will be set off against the final liability.
Note: In both the cases final burden is on customer only.
In case (A) if dealer wants that GST doesn't become part of the cost of the product then he should get himself registered under GST and proceed like (B) case.
RCM is not being Re-instated for now.
Further if in both cases GST is being borne by your tenant, you can register under GST and charge rent under forward charge (your tenant will claim the input, thus it will not form part of his cost) and claim the input on commission. This will benefit you.
In your case you can not charge GST paid to agent from the tenant so GST paid to agent will be your cost and this is one time cost only. It will rise again when there will be change in tenant which is not often. There is no concept of RCM on renting service of property.
Vivek, does that mean if I’m unregistered my tenant pays no GST on rent at all.. not even under RCM? Secondly, are you saying that if I get registered and raise GST invoice on rent payable by tenant, I will still not be able to claim as input the GST paid on commission to agent?
Your tenant doesn't need to pay GST till the RCM provision u/s 9(4) are suspended.
If you will get registered, you will be able to claim the credit of GST on commission.
1) There is no concept of RCM on rental service of property irrespective of your registration. There is no liability on your tenant to pay GST on rent paid to you (normal as well as RCM). Assuming that your tenant is also unregistered.
2) You can claim ITC on commission against GST on rental income if you get registered.
If your property agent is a registered person under GST, he will definitely charge GST in the invoice raised to you. Since you are an unregistered person under GST, this means either you are a small size dealer (not required to get registered) or consumer of the goods or services. If you are a small size dealer, you definitely have to bear the GST from your pocket and not allowed to take benefit of the input tax on the same.
However, sorry to say, i don't understand the concept of injustice in this. Govt. has not barred small dealers to take any benefit of the GST paid by them, It is just an option to them that if they want to take benefit, they may get registration and otherwise avoid all compliance.
Further, if you are a consumer, you definitely have to bear GST from your pocket only. Please remember, that indirect taxes have to be borne only by the consumers of Goods and Services, not manufacturers or traders or service providers. They are just mode of collection of indirect taxes.
Hence, again sorry to say, but i don't see any injustice in this.
Secondly, as far as you getting registered under GST and start raising invoices for your tenant is concerned, you can very well do that and take benefit of GST paid by you to the dealer.
Arguably, in this case, poor tenant will be left at the mercy of injustice.
Anyways, if you get such registration, provide registration details to your dealer, insist him to mention the same on the invoices.
Unfortunately, it is not possible to claim any input credit if you are not registered under GST.
You need to understand the fact that without having GST registration government cant track input tax credit. Hence, its not possible.
It seems your question is been answered.
The end consumer has to bear the costs. If you are unregistered and unable to claim the inputs, it will increase your costs and ultimately you'll charge high from your customers.
If you are unregistered and your tenant is also unregistered and the annual rent is below 20 lacs, no GST shall be applicable; not even in reverse charge.
However, if you are registered, you can claim input of GST paid.