Owners who have rented their property to educational institutes registered under Section 122A of the income tax law, are liable to pay 18% GST on their rental income, the Authority of Advance Rulings – Telangana has said.
In an order dated July 15, 2022, the AAR said that exemption under the Goods and Services Tax regime, is offered only on renting property to religious or charity trusts under Notification Number 12/2017. Renting of property to government-led education institutes does not fall in the category of renting to either a religious trust or a charitable one, the AAR clarified.
The ruling of the AAR comes on a petition filed by one Bollu Siva Gopala Krishna, from Hyderabad, who wanted to ascertain if income earned from renting of property to educational institutions registered under Section 12AA of the Income Tax Act, 1961, or to a government school, was taxable. In his application, Krishna noted that educational institutes are not actually running a commercial business and thus, the doubt arises whether GST provisions apply on rental income thus earned.
Also read all about GST on real estate
Recall here that rental income attracts 18% tax under the current GST regime. GST on rental income is applicable when a landlord receives an annual rent of Rs 20 lakh or more. GST on rent is applicable to properties rented for commercial / business purposes. This is true even if a residential property is rented for commercial / business purposes.