Commercial property rent to go up as tenants to pay GST separately in Tamil Nadu

 Tenants of commercial properties across the state will now have to pay more as the State government will be levying GST separately instead of including it as part of the rent.

Published: 25th April 2019 01:56 AM  |   Last Updated: 25th April 2019 01:56 AM   |  A+A-

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By Express News Service

CHENNAI: Tenants of commercial properties across the state will now have to pay more as the State government will be levying GST separately instead of including it as part of the rent. The Inspector General of Registration has issued a circular to all registering officers that Goods Service Tax payable by the lessee cannot be treated as part of the rent and is covered under stamp duty under the Indian Stamp Act.

“All registering officers are directed to take this into consideration while registering lease deeds of all future cases and cases with effect from July 1, 2017 (GST implementation date),” said the I-G. This comes after Advocate-General, whose opinion was sought on whether the GST payable by lessee should be treated as part of the rent or not. 

The A-G  quoting the Article 35 of the Schedule 1 of the Indian Stamp Act has stated that when the lessee undertakes to pay any recurring charges such as government revenue, the landlord’s share of cess or municipal tax, such amount shall be deemed to be a part of the rent and that GST on rent amount is not a recurring charge on the property.

“As such, this makes it clear that the charges contemplated are in the nature of municipal rates or taxes or any other levy on the property itself and not on the lease rent and hence GST cannot be included as part of the rent for the purpose of paying stamp duty,” the A-G  has stated.Chairman of the Builders Association of India, Southern Centre, S Ramaprabhu said the circular pertained to only commercial properties and this would add to the burden of tenants.  “It would result in commercial properties becoming dearer,” he said. 

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