• GST on rent paid on leased factory annually

Hi, We're going to lease a factory (Parboiled Rice Mill) for a total registered period of 10 years. As per the mutual agreement, annual rent is 15,00,000 per annum and is compounded at 15% every three years. 
Also, the factory is owned by 10 partners, the maximum individual share is 12%, and we pay the lessors individually through checks every month deducting 10% TDS as per the rules. Do we still need to pay GST as the rent paid is within the 20L per annum cap? With the compounding in place, we will be paying 22.81 L per annum in the 10th year. So how much of this would attract tax? The whole amount or the 2.81L over the 20L cap?

Kindly help me with these queries. I will be glad to hear from you.
Asked 3 months ago in GST from Hyderabad, Telangana

Hi,

No, you do not need to pay as the rent paid is within the 20L per annum cap.

With the compounding in place, only the over 20 lakh cap will be taxable.

Payal Chhajed
CA, Mumbai
1240 Answers
9 Consultations

4.8 on 5.0

Hi,

- GST is the liability of the supplier of service. In your case, liability to collect GST if of the owner of the factory and not yours.

- As there are 10 owners of this factory, limit of 20 lacs will be calculated individually.

Thanks

Vivek Kumar Arora
CA, Delhi
1832 Answers
63 Consultations

5.0 on 5.0

The 20 lakhs limit will be calculated individually since there are 10 partners and you need not pay GST as the rent paid is less than the threshold limit of 20 lakhs.

Nikhil Khanna
CA, Mumbai
1429 Answers
19 Consultations

4.8 on 5.0

Yes, you should specify the firm registration numbers of yours and the lessors on the document.

Payal Chhajed
CA, Mumbai
1240 Answers
9 Consultations

4.8 on 5.0

Hi,

- Yes you should mention the firm registration no. of both the firms on the lease agreement.

Thanks

Vivek Kumar Arora
CA, Delhi
1832 Answers
63 Consultations

5.0 on 5.0

Hi,

As the rent paid is less than the threshold limit of 20 lakhs so you are not required to pay GST.

Please note that 20 lakh limit will be calculated individually.

Karishma Chhajer
CA, Jodhpur
731 Answers
4 Consultations

5.0 on 5.0

Yes, you should mention the firm registration numbers of yours and the lessors on the document

Karishma Chhajer
CA, Jodhpur
731 Answers
4 Consultations

5.0 on 5.0

Yes you should mention the firm registration number of both the parties on the lease agreement.

Regards

Nikhil Khanna
CA, Mumbai
1429 Answers
19 Consultations

4.8 on 5.0

First of all the get depends on the total turnover of the firm to whom you are going to pay rent it not only depends on their rent amount because there can be a case that they might be having other income which is included in turnover of gst and so they need to collect gst from you as well even if the total rent amount is below 20 lakh.

When the amount crosses 20 lakh you will have to pa gst on entire amount and not just 2.8 lakh

And at the time of registering rent deed it is advisable to mention the registration number.

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you

Naman Maloo
CA, Jaipur
670 Answers
5 Consultations

5.0 on 5.0

Hi

As rent is below 20 lacs so no GST required.Further GST threshold is calculated individually .

yes firm registration to be specified on documents.

Hope it helps

Swati Agrawal
CA, Indore
740 Answers
2 Consultations

5.0 on 5.0

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