Agro Food Chamber to stay away from Nov. 29-bandh

A traders’ body has given a bandh call for November 29 to oppose the GST on commercial rental.

But the Agro Food Chamber of Commerce and Industry president S. Rethinavelu has in a press statement said they do not back the bandh call and termed it ‘unneeded.’

He said that there was no new tax on commercial rental. Service by way of renting of any property other than residential dwelling is already taxed under GST. If a commercial building is rented out by a landlord, registered under GST to any tenant, registered or not, GST has to be collected by the landlord. In such a situation, if the tenant is also registered and the property is used for taxable business purposes, he can take ITC (Input Tax Credit) and set-off the same from the tax payable by him to the government. This is the existing situation.

As per the Notification No.9/2024 effective from October 10 against which bandh call has been made, if the landlord is an unregistered person, the registered tenant must pay GST under Reverse Charge Mechanism (RCM) and can claim ITC on this payment. This amendment shifts the responsibility of paying GST on rent from the unregistered landlord to the registered tenant under RCM. Hence, neither the landlord nor the tenant is affected by this new notification.

Manufacturers and traders with an annual aggregate turnover of up to ₹1.5 crore, who have opted for composition payment of tax under GST, are eligible for fixed concessional rate of one percent on turnover irrespective of the tax rates from 5% to 28% applicable to the products.

Composition dealers are not eligible to take ITC for their purchases and expenses incurred for their operations.

As per the new notification, if the tenant is a composition dealer and the landlord is unregistered, the tenant must pay GST on rent under R.C.M, and he being a composition dealer enjoying the tax concession, cannot claim ITC on this payment. The opposition is for the restriction to take ITC. It is pertinent to note that a composition dealer who is a tenant under a registered landlord is already paying GST and not taking ITC. So, the impact of the new amendment may be only on few composition dealers and the additional burden is minuscule comparing with the tax concession they enjoy. Hence, this bandh call is “unneeded. Moreover, sporadic closure of shops will weaken the voice of the trade and industry opposing more pressing problems.

The Agro Food Chamber requests the organisation which made the call to withdraw it, the release added.

Published - November 25, 2024 08:45 pm IST