Clarification on taxability of “tenancy rights “under GST

Clarification on taxability of “tenancy rights “under GST

Clarification on taxability of “tenancy rights “under GST is a bit confusing. Doubts have been raised as to whether tenancy premium shall attract GST when stamp duty and registration charges are levied on the said premium. Further, in case of transfer of tenancy rights, a part of the consideration which accrues to the outgoing tenant is liable to GST or not.

In this regard, Central Government vides circular no. 44/18/2018 dated 2nd May 2018 has provided that merely because a transaction or a supply of tenancy rights involves execution of documents which may require registration and payment of registration fee and stamp duty, would not preclude them from the scope of supply of goods and services and from the payment of GST on tenancy premium.

Further, it has been clarified that transfer of tenancy rights to a new tenant against consideration in the form of tenancy premium is taxable. However, grant of tenancy rights in a residential dwelling for use as residence dwelling against tenancy premium or periodic rent or both is exempt [Sl. No.12 of notification no. 12/2017-Central tax (rate)].