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 Government of Karnataka

No. FD 3 CSL 2023 Kamataka Government Secretariat

Vidhana Soudha
Bengaluru, Dated:08.12.2023
CIRCULAR

Subject: GST on Rental Revenue and Rental payments of the

Government Departments.

*****
Government Departments provide property owned by the Government for
commercial rent and also avail rental services from non-governmental sources.
Several departments have raised request for clarification on Government liability
to pay OST on letting out and availing commercial spaces on rent.
-------

This circular is issued to clarify on the role of Government departments in

respect of OST liability with respect to rental services provided and rental services
availed from non-government sources;

The definition of business includes all activities of Government, even if they

are acting as public authorities.

The activity of renting out commercial spaces is supply of taxable services

as per the GST law. It has been classified under supply of services and the entry
has been provided in the notification 11/2017 under Heading 9973-Leasing or
rental services with or without operator. The rate· of tax on such supply of rental
services is at 18% effective from O1.07.2017.

In view of the above, all the Government departments are instructed as follows:

a. Avail registration under GST if the total turnover of the supplies made by
the Government and non-Government entities including the rental services
exceeds 20 lakhs annually.
b. In case, the Government qepartments provide rental services to persons·
registered under GST Act, then the registered person has to pay tax under
Reverse charge mechanism.
c. In other cases, where rental service is provided to persons n~t registered
under OST Act, then the Government departments have to avail registration
and collect 18 percent OST (9% SGST and 9% CGST) from the
shopkeepers/tenants on the rental amount charged.

1
 to availing rental services b~
d. The above numbered (b) and (c) also applies
ces.
Government departments from non-government sour
. \.,
e. Pay the GST collected regularly in form GSTR-3B
•

Depu
Fin ent
To,

1. Chie f Secretary to Government, Vidhana Soud

ha, Bengaluru.
ana Soudha, Bengaluru.
2. Additional Chief Secretary to Government, Vidh
3. Additional Chie f Secretary and Development
Commissioner to Government.
f Minister.
4. Additional Chie f Secretary/Secretary to the Chie
/Secretaries to Government.
5. All Additional Chief Secretary/Principal Secretary
6. Special Secretary to the Governor.
7. All Heads of Departments.
8. All Regional Commissioners.
Zilla Panchayat.
9. All District Collectors/Chief Executive Officers,
ncil, Bengaluru.
10. *Secretary, Karnataka Legislative Assembly/Cou
.
11. *Registrar, High Court of Karnataka, Bengaluru
unal, Kandaya Bhavan,
12. *Registrar, Kamataka State Administrativ~ Trib
• KG Road, Bengaluru-9.
[Link]-Bui-la-i-ng,Bengal-ur .
--- -~ 13 ~.-*-=-'R"-=-egistrar, Kam [Link],M
aluru.
14. *Registrar, Karnataka Appellate Authority, Beng
ion, Udyogasoudha, Bengaluru.
15. *Secretary, Karnataka Public Service Commiss
16. Spare Copy/ SGF.