To: The Ministry of Finance, Government of India

We, the undersigned, strongly protest against the new GST provisions set to come into effect from October 10, 2024. These provisions impose additional burdens on registered businesses concerning rental transactions, significantly impacting small and medium enterprises (SMEs). We urge the government to reverse this order and provide relief to the business community.

Key Issues:

1. Excessive Tax Liability on Rental Transactions:

• Under the new rules, when registered businesses rent properties from unregistered landlords, they are required to pay 18% GST under the Reverse Charge Mechanism (RCM). This categorizes the rent as a "taxable service," leading to added tax liability and compliance burdens.
• Even small businesses, often renting informal or smaller commercial spaces, will face the same tax pressures. Self-invoicing, required under this mechanism, adds unnecessary complexity, making compliance challenging.

2. Adverse Impact on Composition Scheme Dealers:

• Businesses under the Composition Scheme, who usually opt for simplified tax procedures, are also subject to the RCM under this new provision. Paying 18% GST on rental transactions imposes a heavy financial burden, counteracting the simplicity these businesses seek.
• These rules disproportionately affect small traders and entrepreneurs who rely on streamlined processes, hindering their ability to grow and expand.

3. Input Tax Credit (ITC) Challenges:

• Although the Supreme Court recently clarified that ITC can be claimed for services used to build rental properties, the complexities involved in this process, coupled with the need for self-invoicing, make it difficult for small businesses to benefit.
• The RCM, as it stands, will make absorbing these costs challenging, creating unnecessary financial stress and limiting business operations.

Our Demands:

1. Complete Reversal of the Reverse Charge Mechanism on Rental Transactions:

• We call for the immediate reversal of the RCM on rental transactions. The current system stifles the growth of small businesses, and its removal will provide much-needed relief to countless entrepreneurs across the country.

2. Exemption of Commercial Rental Transactions from GST:

• We demand that GST provisions on commercial rentals between registered entities and unregistered landlords be repealed. Small businesses should not be burdened with excessive tax compliance, which restricts their ability to focus on growth and productivity.

3. Simplification and Transparency in GST Compliance:

• We urge the government to simplify and make GST procedures for rental transactions more transparent, including clear regulations on CGST, SGST, and IGST. Simplified compliance will help SMEs navigate the GST framework without undue stress and confusion.

Why This Matters:

Small businesses are the backbone of the Indian economy. The success of SMEs is critical for job creation, economic stability, and sustainable growth. The new GST provisions place unnecessary financial and administrative strain on small businesses, making it harder for them to operate and thrive. We believe that these changes are counterproductive to the government's goal of supporting small enterprises.

We call on the Ministry of Finance to consider the needs of small business owners and reverse the order on the Reverse Charge Mechanism. Let us work together to create a fair and supportive environment for entrepreneurs and traders across India.

Sign This Petition:

By signing this petition, you are supporting the cause of thousands of small business owners who want to see fair and just GST provisions that allow them to grow without undue burdens. Together, we can make a difference.