• Notification Date: 06-11-2021
• Notification No: 14/2021-22

No GST Exemption on Property Rent to Govt. for under-privileged Girl: AAR

The Maharashtra Authority of Advance Ruling (AAR) ruled that no GST exemption on renting of property to Govt for under-privileged Girl. The applicant, M/s. Meerabai Tukaram Borade submitted that the rental income from the properties, per annum, does not exceed the GST registration threshold i.e. Rs.20 lakhs. However, the total rental received exceeds the threshold provided under section 22(1) of the GST Act. Given the aforesaid, the Applicant is un-registered under CGST Act, 2017. However, Sahayak Ayukt Samaj Kalyan Vibhag is deducting TDS under Section 51 of the CGST Act, 2017. This TDS is resulting in cost for the Applicant.

The applicant further submitted that each co-owner receives rent, proportionate to his/her share in the immovable property and the income tax authority assesses them separately on the income so received. Merely because several persons jointly own an immovable property they cannot, therefore, be treated as ‘an association of persons or a body of individuals’. The co-owners, including the Applicant, have not been considered ‘an association of persons or a body of individuals for income Tax. These co-owners have not formed any association to provide taxable service. The applicant has sought the advance ruling on the issue of whether the services provided by the applicant to Samaj Kalyan Department, State Government of Maharashtra (Social Welfare Department) for residential accommodation of underprivileged girls are exempt from GST.

Yet another issue raised was Whether TDS Provisions will be applicable in case where the supply of services is exempt. The coram of Rajiv Magoo and T.R. Ramnani ruled that as the Applicant is not registered under GST and provides services to Social Welfare Department (Samaj Kalyan Department), a Department of State Government, then TDS notification issued under section 51 would be applicable for deduction of TDS.

The AAR further ruled that TDS Provisions will be applicable in cases where the supply of services is exempt.