A prorpety is held by 10 family members registered in their individual names (shares defined clearly in sale deed). Out of 10members 5 are unregistered, two are gst registration holders and remaining is under composition scheme. They want to let out the land for commercial purpose to a manufacturing industry (registered gst holder). Kindly suggest how to deal with this.

Reply

In GST letting out of immovable property is considered as supply of service. Rental income is also a part of aggregate turnover. Further taxpayer should raise taxable invoice if such rental income is related to commercial premises.

As stated in the query, few members are registered in GST, few are covered under composition scheme and rest are unregistered.

So, the registered person has to issue taxable invoice for letting out his part of immovable property.

In case of composition scheme dealers, as per section 10 of CGST Act, 2017, the composition scheme dealers cannot engaged in supply of service, therefore, they have to opt out from the scheme if they will receive income from letting out of property for commercial purpose.

In case of unregistered persons, if rental income is not more than 20 lakh p.a., they are not required to register in GST.