18% GST on commercial properties evokes strong opposition among traders in Tiruchi

Traders in Tiruchi oppose 18% GST on commercial properties, fearing increased financial burden and impact on businesses.

The imposition of 18% Goods and Services Tax (GST) on commercial properties has evoked strong opposition from traders in Tiruchi.

As per the new GST rules, effective from October 10, the tenants will have to pay 18% GST under the reverse charge mechanism (RCM). They are required to pay GST even if the owners of the properties are not registered under GST.

According to traders, the new rule will be effectively applicable to all commercial establishments, irrespective of their sizes. It means that small shops, including tea and coffee shops, snack stalls, betel nut stalls and others, which operate on rental buildings, will have to pay 18% GST.

They foresee that it will create challenges, particularly for tenants under the composition schemes, who cannot claim input tax credit (ITC). They fear that it will automatically result in increase in working capital requirements for the tenants, thereby affecting small manufacturers, traders and service providers, who have taken buildings, offices and sheds on lease or rent.

“It is most probably the worst rule since the GST came into being. It will have a huge impact on the traders and the trades. We could not imagine that even tea and coffee stalls, which run on small structures, are required to pay 18% GST. The rule, if it is not rolled back or rationalised, will have significant political repercussions as well,” said R. Ramesh Kamak, a member of Chamber of Commerce, Tiruchi.

Many traders in Tiruchi were upset over the new GST rule. There had been protests across the State. Various trade bodies had been contemplating to organise protests.

“A trader, who pays ₹10,000 a month towards rent for his tea shop, will have to pay ₹1,800 towards GST. It is huge and it is a big burden for all traders, whether they are small or big,” Mr. Ramesh said.