We own a commercial place that we rent to Hospital. Our monthly rent is 5 lakhs. The hospital does not have enough input credit to pay 18%GST and we are at the negotiation point. Can you help with points on how we can go about collecting 18% GST from the hospital?
This is eye hospital and they pay minimal GST on lenses, frames and medicines. I don’t know how much they pay in GST to do input credit for us.
Hi
Since you are the owner and renting your property for commercial purposes for an amount exceeding Rs. 20 lakhs, you are required to get registered under GST and pay GST @ 18%.
Such GST would form ITC for the hospital which they can take refund of, if unutilized in paying it's GST liability.
The property is in the joint owership or single person holding?
Hi,
Hospital has to pay GST on rental. If they insist you not charging GST on your invoice, then hospital has to pay GST in reverse charge. Hence, there is no incentive for hospital if you don't charge GST on your invoice.
Please feel free to call/ revert in case you need more clarity.
Thanks and regards
Abhishek Dugar
CA CS B.Com
@Lakshita - They seem to have very low GST liability to do ITC. They pay GST on Lenses, Frames, and Medicines which does not amount to as much as they need to pay us on rent. @Vidya - The property is a single person holding. Can the rent still be split and paid partly to non-owner, like, my wife and son to prevent GST? @Abishek - thanks for your inputs.
I understand that. But, when there's excess GST paid towards rent which can't be used to offset their GST liability, they can claim the refund for the excess GST paid on rent.
No the rent can be shared among owner only
Hello,
As per the information provided by you it appears that you are renting your property to a hospital. Please note most of the activities done by a clinic/ hospital is out of the gambit of GST. So they obviously will not be in a position to claim input credit of the GST paid to you in the same month. But they can very well claim the excess as a refund at the year end.
Trust this clarifies your query.
Feel free to call / get back in case of further clarifications.
Thanking You.
Regards,
Rohit R Sharma
BCOM, FCA, LLB, CERT. FAFP
