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GST registration limit for co-owners of a property to be checked individually: AAR

October 9, 2018[2018] 98 taxmann.com 159 (AAR - KERALA)
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CGST: In case of jointly owned property, where rent is collected together, but divided equally and transferred to respective co-owner, small business exemption u/s 22 is eligible to co-owners separately

Section 22 of the Central Goods and Service Tax Act, 2017 - Registration - Persons liable for – In case of jointly owned property, where rent is collected together, but divided equally and transferred to respective co-owner, small business exemption provided under section 22 is eligible to co-owners separately; engaging a co-owner to collect and distribute rent among all owners for administrative convenience has no implication on business exemption under section 22 for individual co-owner

• The petitioner was one of the co-owners of a jointly owned immovable property. There were 13 co-owners holding equal share in 86.78 cents of land and building. They have rented out these properties to different parties. Total rent from all these properties exceeds twenty lakh rupees in a financial year. But, individual share was not exceeding said threshold. Now, the owners were planning to engage one of the co-owners to collect tent and distribute among them for the purpose of administrative convenience through execution of a power of attorney.

• A co-owner holding immovable property jointly with other co-owners, but receiving lease rent separately, in proportion to his shares in the property, is eligible for the benefit of threshold exemption. Co-ownership of property is for financial, administrative and family reasons. The rent is collected from all the parties together and divided equally and transferred to the bank account of each co-owner. If the individual receipts of a co-owner from all his business, including 'renting of immovable property' exceeds Rs.20 lakhs in a financial year, the respective person has liability to register under section 22.

• The small business exemption, provided under section 22 is eligible to the co-owners separately in the case of jointly owned property, where rent is collected together, but divided equally and transferred to the respective co-owner. Further, engaging a co-owner to collect and distribute rent among all the owners for administrative convenience has no implication on the business exemption under section 22.

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