Key Changes in Residential Property Rental Exemptions and Removal of S. No. 23A {Notification No. 15/2022}

Simplified Explanation of Notification No. 15/2022-Central Tax (Rate)

Purpose: This notification updates the list of exempt services under the Central Goods and Services Tax (CGST) Act, specifically related to the renting of residential properties and certain other services.

Key Points:

1. Update on Exempt Services:
   • Addition of Explanation for S. No. 12:
     • Explanation Added: For the exemption under this entry, the renting of residential property is clarified to include:
       • Situation 1: When the registered person (e.g., a business owner) rents out a residential property in their personal capacity.
       • Situation 2: The residential property is used by the registered person as their own residence, not for their business purposes.
   • Removal of S. No. 23A:
     • Omission: S. No. 23A and its related entries, which previously provided specific exemptions, are removed from the notification.

Effective Date:

• January 1, 2023

What This Means:

• Clarification on Residential Property Rental Exemption:
  • The amendment clarifies that renting a residential property to oneself, where the rental is done personally and not through a business entity, qualifies for GST exemption. This is important for individuals who own properties and use them as their personal residences while having a registered business.
• Removal of Certain Exemptions:
  • The deletion of S. No. 23A means that any exemptions previously available under this entry are no longer applicable. The specific services or conditions covered under this entry are no longer exempt from GST.

Example:

Scenario:

• Before January 1, 2023:
  • A registered person who owns a residential property and rents it to themselves, using it as their own residence, would benefit from GST exemption under the relevant entry in the notification.
• After January 1, 2023:
  • The exemption for renting residential property to oneself remains clarified, ensuring that such rentals, when done personally and not through a business, are exempt from GST. However, any exemptions under S. No. 23A are no longer available, so businesses should review the new exemption list to ensure compliance.