The article discusses the relevance of rental agreement for GST registration and how it is helpful to both the tenant and the landlord.
A well-crafted rent agreement is key for GST registration, covering essential points like online registration, notarization, agreement size, and tenant-landlord duties. Properly structured, it smoothens registration, ensures compliance, and strengthens trust between both parties.
Formation of a Rent Agreement
An Essential Rent agreement is a document that binds the landlord and tenant to the rental of a property. It defines the obligations of both parties, such as rates, duration, and conditions.
The rent agreement also helps track the payments made by the tenant towards rent. Further, it may prove that individual life at a specific address.
A rent agreement is required for GST registration purposes under section 27(2)(iii) of CGST Act 2017 if the property exceeds ₹50 Lakhs per annum.
Registration of Rent Agreement
Registration of rent agreements is a must when it comes to GST registration. Your landlord must provide a rent agreement certificate with an authorized signature, date, and stamp. This document is required when filing your application with tax authorities.
Beware of Fly by Night Operators
Don’t get fooled by fly-by-night operators! There are many quick, easy ways to register your rent agreement online. If a provider requires you to fill out long forms and answer many questions, then it’s likely that they’re not legitimate.
Pay attention to the promises they make if they sound too good to be true, you should think twice about doing business with them.
Demerits of Not Registering Your Rental Agreement
It is important to remember that it is not enough for your landlord just to provide you with a rent agreement. The agreement needs to be registered with the government authorities, as well as on paper.
As of now, the current rates are 1% and 10%. However, if your landlord doesn’t register the agreement or if you don’t have an agreement at all, then you will be taxed at 28%.
The only way around this is by presenting a rent receipt from your landlord. This receipt will show that the rent has already been taxed when paid, which means you will not have to pay any more tax on it.
Online Rent Agreement Portals
Many people are confused about how they can register with RTA and file their GST. So we’ve put together some guidelines to help you navigate the process.
- Log on to the government’s website.
- Register yourself by filling out your particulars and uploading the required documents.
- You must also fill out a rent agreement and upload it if you’re a new business.
- Add your business address, contact numbers, email id, etc.
- Fill up the form about your business activity and upload scanned copies of your PAN card, Aadhar card, etc., as well as details of directors or authorized signatories, if any.
Notarised Agreement for GST Registration
You don’t need a notarised or registered agreement for GST registration. You can get it printed on stamp paper. Also, the cost for the same is too nominal. All you need to do is just get it printed on a ₹100 or ₹200 stamped agreement.
Value of an Existing Rent Agreement
A rent agreement is an official record of the terms and conditions of a lease, which both landlords and tenants sign. Essentially, it is a binding contract between the two parties which spells out everything from the payment amounts to what happens if one party decides to break the agreement before its expiration date.
A landlord’s intention in providing a tenant with this document is usually to have some form of protection from any damage the tenant may cause during their time at the property. Therefore, all terms must be clearly defined within the agreement before signing it for yourself or your company to avoid unnecessary penalties.
Use of a Residential Agreement for GST Registration
You can apply for GST registration if you use that place for your business activities. GST officials visit your premises to evaluate the authenticity. You also need to display a GST number around your premises so that they can verify your status.
The Need for a Rent Agreement if the Landlord Pays Tax on your Behalf
If your landlord is paying tax on your behalf, you don’t need a rent agreement as long as they have a valid PAN and TAN. In this case, the rent agreement isn’t necessary, but it can still be a good idea if you want some proof that you are being paid.
If your landlord doesn’t have a valid PAN and TAN, then the rent agreement becomes essential because it’s proof that they are paying taxes on your behalf and will help the authorities know who should be paying the tax.
Rent Agreement Size for GST Registration
The size of a rent agreement for GST registration does not have a specific requirement mentioned in the GST laws. However, it is important to ensure that the rent agreement contains all the necessary information and is a legally valid document. The size of the document is generally not a factor considered for GST registration. Instead, the focus should be on the content and details included in the rent agreement.
Major Components of a Rent Agreement
Here are the major components that should be included in a rent agreement for GST registration:
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Details of Parties:
- Full names and addresses of the landlord (lessor) and the tenant (lessee).
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Property Details:
- Complete address of the rented property, including the specific location and any additional identification details.
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Term of Lease:
- Duration of the lease agreement, specifying the start date and end date.
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Rent Amount and Payment Terms:
- Clearly mention the monthly or annual rent amount.
- Outline the payment terms, due date, and any late payment penalties.
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Security Deposit:
- Clearly state the amount of security deposit, if applicable.
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Maintenance Charges:
- Specify any additional charges for maintenance, utilities, or other services.
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Mode of Payment:
- Detail the method through which rent and other payments will be made.
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Use of Property:
- Clearly outline the permissible use of the rented property.
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Renewal and Termination Clauses:
- Specify conditions for renewal or termination of the lease agreement.
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Responsibilities of Parties:
- Clearly define the responsibilities of both the landlord and the tenant.
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Any Additional Terms:
- Include any additional terms or conditions agreed upon by both parties.
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Signatures:
- Ensure that the agreement is signed by both the landlord and the tenant, along with any witnesses.
It is advisable to consult with legal professionals to ensure that the rent agreement is comprehensive, legally binding, and meets all the necessary requirements for GST registration purposes.
Checking the Landlord’s GST Status
You need to take care of several things while renting out your property, and getting the correct GST registration is one of them. It is a crucial requirement if you plan on renting your property at least once every 60 days.
First, check with your landlord about their GST status. If they are registered, you’re all set, but if not, then it’s up to you as the tenant to register the house. You will need a copy of the rent agreement and other supporting documents from when the landlord originally purchased the property.
Conclusion:
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