SRINAGAR: The Government of India has clarified that there is no plan to roll back the imposition of the Goods and Services Tax (GST) on leased properties, despite concerns over its financial burden on tenants and property owners. The information was provided by Finance Minister Nirmala Sitharaman in response to a starred question raised by Sajda Ahmed in the Lok Sabha on February 10, 2025.
GST on leasing and renting property has been applicable at a rate of 18 per cent since the introduction of the tax regime in 2017. The GST Council, a constitutional body comprising representatives from both the Centre and the States, determines exemptions and tax rates. In its 54th meeting, the Council recommended that the levy on renting and leasing of non-residential (commercial) property be brought under the reverse charge mechanism. This was a shift from the earlier forward charge basis and was implemented through Notification No. 09/2024-CT(R) dated October 8, 2024.
Following this change, concerns were raised that composition scheme taxpayers, who are ineligible to claim Input Tax Credit (ITC), were disproportionately affected by the new taxation structure. Responding to these concerns, the GST Council deliberated the issue in its 55th meeting held on December 21, 2024, and recommended exempting composition taxpayers from the reverse charge mechanism for leasing and renting services received from unregistered persons. This change was formalised through Notification No. 07/2025-CT(R) issued on January 16, 2025.
While addressing the question of data maintenance on leased properties, the Finance Minister stated that the Central Government does not maintain a record of such data across the country. The absence of a comprehensive survey or database poses a challenge in assessing the full economic impact of GST on leased properties.
With GST policy changes being decided by the GST Council, future revisions will depend on further recommendations and economic considerations. However, for now, leased properties continue to attract an 18 per cent GST, with a recent modification providing relief to composition scheme taxpayers.
