Rent HSN Code: What All Owners Must Know?

As an owner, you must know several rules and measures to ensure that you rent out your property, machinery, or equipment in accordance with Indian tax laws. The solution is to comprehend the rent HSN code, a system that aids companies such as yours in accurately categorising rental services for tax purposes. In India, rental services for personal and household goods—primarily machinery and equipment—are provided by the 997212 HSN code. In this article, you will discover the significance of this code and how it plays a crucial role in determining your tax responsibilities.

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Table of Contents

What is the Rent HSN Code?

Importance of HSN Codes

GST Rates Applicable to Rental Services

Leasing or Rental Services HSN Codes

Conclusion

Most Asked Questions

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What is the Rent HSN Code?

Knowing the HSN codes that apply to your company is crucial if you are a small firm that provides leasing or rental services. The Harmonised System of Nomenclature (HSN) was established by the World Customs Organisation to facilitate the taxation of goods and services by nations. An HSN code is a set of alphanumeric or numeric codes linked to a certain product. Every code is associated with a certain product, category, or subcategory. The more exact the classification, the longer the code. The organisation of the HSN codes is hierarchical. The 997212 HSN code is used in India for rental services of home goods, machinery, and equipment. The same code is applicable to godown, shop, or office rent. For businesses that rent out vehicles, construction equipment, or even commercial real estate, this area is crucial.

Importance of HSN Codes

It is essential to correctly categorise leasing or rental services under the relevant HSN code for a number of reasons. 

• Legal Requirement: The use of HSN codes on invoices is required by the Indian tax authorities. There may be financial penalties and legal repercussions for failing to provide the HSN codes or for providing incorrect codes.

• GST Compliance: In India, it is essential to recognise and provide an appropriate HSN code in order to comply with GST. The GST rate that applies to any good or service is determined by the HSN code. Inaccurate taxation due to improper coding may result in fines and penalties. 

• Avoiding Over-Taxation or Under-Taxation: Proper HSN code classification keeps products and services from being over- or under-taxed. The correct code guarantees that the correct GST rate is applied, resulting in accurate tax computations.

• Auditing: For audit and record-keeping purposes, accurate HSN code reporting is essential. When needed, it guarantees that companies can produce accurate and reliable records of their transactions.

GST Rates Applicable to Rental Services

Different rental services are subject to varied rates under India's Goods and Services Tax (GST) plan. For instance, when you rent cars, machinery, or business or residential real estate, you must pay 18% GST. When renting furniture or other household items, there can be a 12% GST fee. By highlighting which rental services are subject to 18% and 12% tax, the 997212 HSN code clarifies this and aids businesses in creating sound financial strategies. For GST and income tax purposes, businesses need to report their rental income under the apt HSN code and file the relevant returns. Companies can avoid mistakes that cost a lot of money and make the tax process go more smoothly if they know the 997212 HSN code.

Leasing or Rental Services HSN Codes

The following table illustrates the HSN Codes and GST rates for various leasing and rental services in India:

SAC Code	Service Types	Rate (%)	Effective Date	Rate Revision
9973	Leasing or rental Services with/without operator	12/18	1/01/2019 25/01/2018 1/07/2017	18% 5% 12%
997311	Leasing or rental services related to transport equipment including containers, with/without operator	12/18	1/01/2019 25/01/2018 1/07/2017	18% 5% 12%
997312	Leasing or rental services related to agricultural machinery and equipment with/without operator	12/18	1/01/2019 25/01/2018 1/07/2017	18% 5% 12%
997313	Leasing or rental services related to construction machinery and equipment with/without operator	12/18	1/01/2019 25/01/2018 1/07/2017	18% 5% 12%
997314	Leasing or rental services related to office machinery and equipment (except computers) with/without operator	12/18	1/01/2019 25/01/2018 1/07/2017	18% 5% 12%
997315	Leasing or rental services related to computers with/without operators	12/18	1/01/2019 25/01/2018 1/07/2017	18% 5% 12%
997316	Leasing or rental services related to telecommunications equipment with/without operator	12/18	1/01/2019 25/01/2018 1/07/2017	18% 5% 12%
997319	Leasing or rental services related to other machinery and equipment with/without operator	12/18	1/01/2019 25/01/2018 1/07/2017	18% 5% 12%
997321	Leasing or rental services related to televisions, radios, video cassette recorders, projectors, audio systems and related equipment and accessories (home entertainment equipment)	12/18	1/01/2019 25/01/2018 1/07/2017	18% 5% 12%
997322	Leasing or rental services related to video tapes and disks (home entertainment equipment )	12/18	1/01/2019 25/01/2018 1/07/2017	18% 5% 12%
997323	Leasing or rental services related to furniture and other household appliances	12/18	1/01/2019 25/01/2018 1/07/2017	18% 5% 12%
997324	Leasing or rental services related to pleasure and leisure equipment.	12/18	1/01/2019 25/01/2018 1/07/2017	18% 5% 12%
997325	Leasing or rental services related to household linen.	12/18	1/01/2019 25/01/2018 1/07/2017	18% 5% 12%
997326	Leasing or rental services related to textiles, clothing and footwear.	12/18	1/01/2019 25/01/2018 1/07/2017	18% 5% 12%
997327	Leasing or rental services related to do-it-yourself machinery and equipment	12/18	1/01/2019 25/01/2018 1/07/2017	18% 5% 12%
997329	Leasing or rental services related to other goods	12/18	1/01/2019 25/01/2018 1/07/2017	18% 5% 12%
997331	Licensing services for the right to use computer software and databases.	12/18	1/01/2019 25/01/2018 1/07/2017	18% 5% 12%
997332	Licensing services for the right to broadcast original films, sound recordings, radio and television programme etc.	12/18	1/01/2019 25/01/2018 1/07/2017	18% 5% 12%
997333	Licensing services for the right to reproduce original art works	12/18	1/01/2019 25/01/2018 1/07/2017	18% 5% 12%
997334	Licensing services for the right to reprint manuscripts, books, journals and periodicals.	12/18	1/01/2019 25/01/2018 1/07/2017	18% 5% 12%
997335	Licensing services for the right to use R&D products	12/18	1/01/2019 25/01/2018 1/07/2017	18% 5% 12%
997336	Licensing services for the right to use trademarks and franchises	12/18	1/01/2019 25/01/2018 1/07/2017	18% 5% 12%
997337	Licensing services for the right to use minerals including their exploration and evaluation	12/18	1/01/2019 25/01/2018 1/07/2017	18% 5% 12%
997338	Licensing services for the right to use other natural resources including telecommunication spectrum	12/18	1/01/2019 25/01/2018 1/07/2017	18% 5% 12%
997339	Licensing services for the right to use intellectual property products and other resources.	12/18	1/01/2019 25/01/2018 1/07/2017	18% 5% 12%

The cess on all these categories is nil, as long as the Ministry of Youth Affairs and Sports' Director of Sports attests that the services have a direct or indirect connection to any of the FIFA U-17 Women's World Cup 2020 events.

Conclusion

The rent HSN code must be understood by rental companies. Businesses can use the 997212 HSN code to categorise rental services in order to adhere to tax regulations and apply the appropriate GST rates. Correct use of the HSN code will improve the efficiency of your finances, reduce tax issues, and increase the security of your company. With the correct HSN code, businesses can rent out land, machinery, and other assets and earn a lot of money.

FAQ

Q1. Which HSN code is for rent? 

The HSN number for renting in India is 997212, and it covers services for renting out tools, machinery, and personal belongings.

Q2. What is the GST rate for hiring a business space?

The GST rate is 18% if you rent out a commercial property, and the 997212 HSN code applies.

Q3. Would I be charged GST on rental income?

When you rent out a residential property for residential use, GST is not assessed. However, since it would be regarded as a supply of services, any type of business leasing of real estate would be subject to an 18% GST charge.

Q4. How do you calculate GST on rental income?

Regarding GST on rent, the property owner is required to tack on GST to the rent sum. Beginning with the assessment year 2020–21, the rent payer must deduct 10% income tax at the source if the annual rent for the property exceeds Rs. 2.40 lakh.

Q5. Can I claim GST on my rental property?

If your rental property is utilised for business reasons but not for residential ones, you are able to claim GST on it.

Q6. Is rental income included in GST turnover?

Input is not included in the GST turnover even if it is levied on the residential rent. On the other hand, it would be factored into the GST turnover calculations if it was commercial rent.

Q7. What is the rent HSN code applicable to?

The HSN code of rental income is applicable to a variety of rental services, such as:

• Leasing of a property (residential or commercial)

• Equipment and machinery rentals.

• Automobile rentals, including trucks, buses, and cars.

• Renting machinery and tools for construction.

• Renting out household items and furniture.