:- Renting of any immovable property other than residential dwelling.
Any unregistered person
A person registered under GST Act other than a person register under section 10 (Composition levy) (the words "Other than a person registered under section 10" are inserted vide notification no 07/2025-CTR dated 16th January 2025)
To further streamline tax administration and widen the base of reverse charge mechanism (RCM) in high-value service sectors, the government introduced Entry No. 5AB to Notification No. 13/2017-Central Tax (Rate) through Notification No. 09/2024-Central Tax (Rate) dated 8th October 2024, effective from 10th October 2024.
This entry brings under the reverse charge mechanism a broader class of renting transactions that were earlier chargeable under forward charge.
Prior to this amendment, the renting of immovable property (other than by government or local authority) was taxable under forward charge, and the supplier was required to discharge the tax liability if they were registered.
However, renting transactions are frequently undertaken by unregistered individuals or firms, especially for office, warehouse, or staff accommodation, resulting in non-compliance or under-reporting of GST.
To overcome this, Entry No. 5AB now shifts the burden of tax payment to the recipient, provided the recipient is registered (other than a person registered under section 10) and the supplier is an unregistered person. This ensures that the recipient, being GST-registered and more compliant, accounts for and pays the GST under RCM.
There was a huge debate as to whether this entry is applicable to all the properties or only to immovable property as the original notification no 09/2024- CTR stated "property". However, through corrigendum dated 22nd October 2024, it has been provided that the word "property" in this notification shall be read as "immovable Property"
Let us understand the comparison of the following four entires with the help of table below -
Original notification (13/2017-CTR)
Notification No. 3/2018 - CTR
(w.e.f.
25.01.2018)
Notification No. 5/2022 - CTR
(w.e.f.
18.07.2022)
Notification No. 9/2024 - CTR
(w.e.f.
October 2024)
Any service (notified) provided by Govt. /local authority
Renting of immovable property by Govt. / local authority
Renting of residential dwelling
Renting of immovable property other than
residential dwelling
Central / State Govt., Union Territory, or local authority
Central / State Govt., Union Territory, or local authority
Business entity located in taxable territory
Not specific - general services
Residential dwelling only
Immovable property other than
residential dwelling
As applicable (commonly
18%)
RCM
Applicability Condition
Recipient must be a
business entity
Recipient must be registered
Recipient must be registered
Supplier must be unregistered, recipient must be registered
Allowed if used in business and not blocked under
Section 17(5)
Allowed if used in business; blocked if for personal use (Sec 17(5)(g))
Fire clearance, pollution NOC, regulatory approvals
Shop rent from municipality to a registered dealer
Flat rented to company for director's accommodation
Godown leased by unregistered person to a registered business