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Microlesson · 5-min read

RCM - Renting of Immovable Property

## RCM on Renting of Immovable Property

### Two Distinct RCM Entries

Entry A — Renting of Residential Dwelling

Service of renting of residential dwelling by any person to a registered person (used for residence OR commercial) → RCM.

Entry B — Renting of Other Immovable Property

Service of renting of immovable property other than residential dwelling by any unregistered person to a registered person (other than composition taxable person) → RCM.

### Important Exemption Carve-Out

Even where RCM would otherwise apply on residential dwelling, it is exempt if:

  • Rented to a registered person who is a proprietor, and
  • The proprietor takes such property on rent in his personal capacity for his own residence (not as part of his business)

### Comprehensive Matrix — Residential Dwelling

SupplierTenantPurposeTreatment
Reg/UnregUnregisteredResidenceExempt
Reg/UnregRegistered (proprietor, personal use)ResidenceExempt
Reg/UnregRegistered (other than above)ResidenceRCM
Reg/UnregRegisteredCommercialRCM
Reg/UnregUnregisteredCommercialFCM

### Comprehensive Matrix — Commercial (Other than Residential Dwelling)

SupplierTenantTreatment
RegisteredUnregisteredFCM
RegisteredRegisteredFCM
UnregisteredRegistered (composition)FCM
UnregisteredRegistered (regular)RCM
UnregisteredUnregisteredFCM (but no GST as supplier not taxable person)

### Key Takeaways

1. For residential dwelling, the supplier's registration status is irrelevant - RCM applies whenever recipient is registered (subject to the personal-residence exemption for proprietors).

2. For commercial/other immovable property, RCM is triggered only when supplier is unregistered AND recipient is registered regular dealer.

3. A composition dealer recipient never bears RCM on these renting entries.

Worked example

### Example 1

Example 1: Mr. A (unregistered individual) lets out a flat as residential dwelling to Mr. B (registered regular dealer) for his employees' stay.

RCM by Mr. B (residential dwelling to registered person, not personal use of proprietor).

### Example 2

Example 2: Mr. A (unregistered) lets out a shop to Mr. B (registered regular dealer) for business use.

RCM by Mr. B (commercial property; supplier unreg, recipient reg-regular).

### Example 3

Example 3: Mr. A (unregistered) lets out a shop to Mr. C (composition dealer).

FCM - but since supplier is unregistered, no GST liability arises.

### Example 4

Example 4: Mr. A (registered) lets out commercial shop to Mr. B (registered).

FCM by Mr. A.

⚠️ Common exam mistakes

  • Applying RCM on residential dwelling rented to an unregistered tenant - this is exempt
  • Ignoring the proprietor personal-residence exemption - exempt even if proprietor is registered
  • Applying RCM on commercial property where the supplier is already registered - here FCM continues
  • Applying RCM on commercial rental to composition dealer - composition dealers are excluded
  • Confusing residential dwelling RCM (any supplier) with commercial RCM (only unregistered supplier triggers it)
Bare-Act text Entries 5AA and 5AB of Notification 13/2017-CT(R) · Notification No. 13/2017-CT(R) dated 28.06.2017 (entries inserted by amendments) · click to expand
Service by way of renting of residential dwelling to a registered person - tax shall be paid on reverse charge basis. Service by way of renting of any immovable property other than residential dwelling by any unregistered person to any registered person (other than person who has opted to pay tax under section 10) - tax shall be paid on reverse charge basis.
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