New change in GST RCM on Rent, Notification No.07/2025 CT(R)

Date: January 16, 2025
Issued By: Ministry of Finance, Department of Revenue
Effective Date: Immediate

The Central Board of Indirect Taxes and Customs (CBIC) has issued Notification No. 07/2025-Central Tax (Rate) to implement recommendations from the 55th GST Council Meeting held on December 21, 2024. This notification amends Notification No. 13/2017-Central Tax (Rate) by modifying the applicability of the Reverse Charge Mechanism (RCM) for services involving the renting of immovable property, with specific exclusions for composition taxpayers.

Amendment to Serial No. 5AB

The amendment modifies the provisions related to services by way of renting of immovable property (other than residential dwellings) under the RCM.

(B) against serial number 5AB, in column (4), after the words “Any registered person”, the words “other than a person who has opted to pay tax under composition levy” shall be inserted.

Explanation:

• The earlier provision applied to any registered person receiving such services from an unregistered person under RCM.
• The amended provision excludes composition taxpayers from the scope of RCM for these services.

Regularization of Transactions (October 10, 2024 – January 15, 2025)

To address transactions that occurred from October 10, 2024 (the effective date of Notification No. 09/2024-Central Tax (Rate)) to the issuance of the current notification, the government has opted for an “as is where is” basis. This ensures compliance without reopening past transactions for taxpayers who fall under the excluded category.

Impact of the Notification

For Composition Taxpayers

• Exclusion from RCM:
  • Composition taxpayers are no longer liable to pay GST under RCM for renting of immovable property services.
  • This reduces compliance burdens and simplifies tax obligations for small businesses and service providers opting for composition schemes.

For Registered Recipients (Non-Composition Taxpayers):

• Registered taxpayers (not under composition) remain liable to pay GST under RCM for such transactions with unregistered suppliers.

For Past Transactions:

• Transactions between October 10, 2024, and January 15, 2025, are regularized without additional compliance or penalties for composition taxpayers.

Conclusion

Notification No. 07/2025-Central Tax (Rate) simplifies compliance by excluding composition taxpayers from the ambit of RCM for renting of immovable property services. This amendment aligns with the government’s commitment to easing GST compliance and promoting small businesses. Taxpayers should assess their transactions to ensure proper adherence to the updated provisions.

For detailed instructions and applicability, refer to the official notification issued by the CBIC.

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