Where a property is jointly owned and let out, the GST analysis begins with a question that is often answered incorrectly: who is the supplier? The GST Council and judicial analysis treat co-owners as distinct suppliers where their shares are ascertainable and their rental income is separately assessed. Each co-owner is a separate person for GST purposes, and each must obtain a separate GST registration if that co-owner’s share of the consideration exceeds the threshold. The co-owners are not automatically an association of persons merely because they own the property jointly.
The Distinct-Supplier Principle
The judicial position is that co-owners of a jointly held property are not an association of persons for GST purposes where their income from renting is separately ascertainable and assessed individually. Each co-owner is a supplier of the lease or licence service to the extent of that co-owner’s share. The threshold exemption applies to each co-owner’s individual share, not to the aggregate rent of the property.
This principle has a practical consequence for invoicing. The co-operative society or the tenant should issue separate invoices to each co-owner, mentioning each co-owner’s GSTIN, so that each co-owner can claim input tax credit where eligible and can report the income correctly. A single invoice in the name of one co-owner for the entire rent does not reflect the distinct-supplier characterisation.
Registration and Threshold
Each co-owner must register if that co-owner’s share of the rental consideration exceeds ₹20 lakh in a financial year (₹10 lakh in the special category states specified for services). The aggregate turnover is computed for each co-owner separately, not for the property as a whole. Where one co-owner’s share exceeds the threshold and another’s does not, only the former is required to register.
The registration application should reflect the co-owner’s share and the property details. The GSTIN issued to each co-owner is separate, and the invoices should carry the respective GSTIN.
The AOP Controversy
The contrary view—that co-owners constitute an association of persons and should be treated as a single person—has been considered in judicial analysis and rejected where the shares are ascertainable and the income is separately assessed. The AOP characterisation would aggregate the rent and apply a single threshold, which can push the co-owners into registration even where each individual share is below the threshold. The distinct-supplier view is more favourable and has judicial support, but the co-owners should document the share arrangement and the separate assessment to support the position.
Commercial Versus Residential Property
The distinct-supplier principle applies to both commercial and residential property. However, the rate differs. Commercial property leasing attracts 18% GST on the full consideration where the supplier is registered. Residential property rented for residential use is exempt; residential property rented to a business entity can attract 18%, and in some cases reverse charge applies. The co-owners should determine the character of the property and the recipient before applying the rate.
Documentation and Compliance
The co-owners should maintain the ownership deed, the share arrangement, the lease or licence agreement, the separate invoices and the GST returns. The tenant should obtain separate invoices from each registered co-owner and should ensure that the GSTIN on each invoice matches the supplier. The society should issue separate maintenance invoices to each co-owner where the maintenance charge is separately recovered.
What the Co-Owners Should Control
The co-ownership outcome depends on three variables: whether the co-owners are treated as distinct suppliers rather than an AOP; whether each co-owner’s share crosses the registration threshold separately; and whether the invoices and agreements reflect the separate shares. The co-owners that control these variables avoid a single-supplier characterisation that aggregates the rent and pushes them into registration.
Call to Action: We advise co-owners, tenants and societies on joint-property GST, separate GSTIN requirements and the AOP controversy. For a co-ownership-specific review, contact office@anujdesaiassociates.com, Ph No. 9619456656, Website https://anujdesaiassociates.com, LinkedIn linkedin.com/in/ca-anuj-desai-122547230.