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.
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 5 years ago in GST
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
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.
Thanks for the response, Another small question, During the lease registration of the above firm, Should we specify the firm registration numbers of ours and the lessors on the document? Is this mandatory as we've been told so by a few? I'm sorry if the question framing doesn't make complete sense. Please help me with this.
Asked 5 years ago
Yes, you should specify the firm registration numbers of yours and the lessors on the document.
Hi,
- Yes you should mention the firm registration no. of both the firms on the lease agreement.
Thanks
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.
Yes, you should mention the firm registration numbers of yours and the lessors on the document
Yes you should mention the firm registration number of both the parties on the lease agreement.
Regards
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
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
Ask a Chartered Accountant
Get tax answers from top-rated CAs in 1 hour. It's quick, easy, and anonymous!
Ask a CA