I understand GST on commercial rental is 18% in the annual rental exceeds 20L, in my case I am receiving total annual rental of 25L and the property is is owned by my mother only. Can I split the rent by making separate rental agreements between the tenants and my father and mother to avoid Collecting GST from the tenants. And if possible how do I make my father a legal co-owner?
What are my options?
Hi
Without an ownership in the property, your father cannot receive the rent. So, a co-ownership would be required for which your mother can transfer part of the property to your father with consideration or as a gift. This would need to be registered and stamp duty shall have to be paid.
So once the ownership has been divided, will the income limit for GST payment go up to 40L combined? Just want to understand the 20L limit is per individual.
So once the ownership has been divided, will the income limit for GST payment go up to 40L combined? Just want to understand the 20L limit is per individual.
Yes. The limit is per individual.
If the ownership is divided and the rental agreements are made separately, 20 + 20 lacs limit shall be applicable.
The 20L limit is per PAN. As the property is owned by your mother only, the rental income can be received by her only. If rental income is split between your parents, still your father needs to pay rent to your mother, either in full or partly. Thus the threshold limit crosses and GST becomes applicable.
My suggestion is to collect GST and pay it to avoid unnecessary complications.
Hi,
The limit of 20L Turnover is per Person.
You can legally make your father as co-owner by way of a gift deed executed by your Mother. You will have to pay only the requisite Stamp Duty and the Registration Charges.
Only after your father becomes legal co-owner, you can make separate rent agreements.
Your mother will have to gift half of the property to your father and you need to register the gift deed.
Post that, income will br divided between your father and mother and each owner will have the limit of 20 lacs individually.
However, clubbing provisions may apply and for income tax purpose, income may be taxed in the hands of your mother.
Please feel free to call/ revert in case you need more clarity.
Thanks and regards
Abhishek Dugar
CA CS B Com
Hello,
Yes, once the ownership is divided, you will get a threshold limit of Rs.20 Lacs per person which sums upto Rs.40 Lacs in totality.
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
