In the world of GST compliance, one hidden risk can invalidate your entire Input Tax Credit (ITC) — that risk is paying rent to a landlord whose GSTIN is inactive.
You may think you're compliant because you paid GST on rent, but if the landlord's GST registration is cancelled or inactive, that invoice is invalid, ITC is denied, and you’re liable under RCM.
Legal Foundation: What the Law Clearly Says
| Section / Rule | Legal Provision | Implication |
|---|---|---|
| Section 7(1)(a) | Renting commercial property = taxable supply | GST is applicable |
| Section 32(1) | No person can collect GST unless registered | Landlord with inactive GSTIN cannot charge GST |
| Section 9(3) + Notification 13/2017-CT(R) | If supplier is unregistered, recipient pays GST under RCM | You (tenant) must pay GST under RCM |
| Rule 31(3)(f) & (g) | Self-invoice and payment voucher must be issued for RCM | Required documentation under RCM |
| Section 16(1) | ITC available on tax paid under RCM if all conditions met | You can claim ITC after paying RCM in cash |
| Section 24(iii) | Mandatory GST registration for persons liable to RCM | Even small businesses must register for GST if under RCM |
What is an “Inactive GSTIN”?
An inactive GSTIN is either:
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Suspended (temporarily by the department), or
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Cancelled (voluntarily or by department).
Such a person is deemed unregistered, and cannot charge GST or issue valid tax invoices.
When to Apply RCM on Rent – Scenario Matrix
| Scenario | GSTIN Status | GST Charged? | Action | RCM? | ITC Available? |
|---|---|---|---|---|---|
| A | Active | Yes | Pay rent + GST | ❌ | ✅ Yes |
| B | Inactive | Yes (Invalid) | ❌ Don’t pay GST | ✅ Pay RCM | ✅ On RCM |
| C | Inactive | No | Pay rent only | ✅ Pay RCM | ✅ On RCM |
| D | Inactive earlier, now Active | Depends on timing | Review period | ✅ or ❌ | Based on actual compliance |
Step-by-Step Solution if Landlord's GSTIN is Inactive
✔ Step 1: Check GSTIN Status
Search landlord’s GSTIN at gst.gov.in → Save PDF/Screenshot.
✔ Step 2: Stop Paying GST to Landlord
Landlord cannot legally collect GST — don’t accept invoices with GST from inactive GSTINs.
✔ Step 3: Pay GST Under RCM
Pay 18% GST on rent from your electronic cash ledger using Form PMT-06.
✔ Step 4: Issue RCM Documentation
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Self-Invoice (Rule 31(3)(f)) — show GST breakup.
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Payment Voucher (Rule 31(3)(g)) — proof of payment.
✔ Step 5: File GSTR-3B Properly
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Table 3.1(d): RCM tax paid
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Table 4A(3): ITC claim (on RCM paid)
✔ Step 6: Claim ITC on RCM Paid
Only after actual tax payment (cash) and with valid RCM compliance, claim ITC in the same or eligible period (Section 16(4)).
✔ Step 7: Maintain a Complete Audit Trail
Rent agreement, GSTIN screenshots, bank proof, self-invoice, payment voucher, RCM challan → retain for 6 years.
What If You Already Made a Mistake?
❌ Paid GST to Inactive GSTIN and Claimed ITC
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Issue: Invoice is invalid → ITC will be disallowed.
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Fix:
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Reverse ITC with interest.
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Pay GST under RCM now.
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Claim correct ITC on RCM.
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❌ Didn’t Pay GST at All (No GST, No RCM)
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Issue: GST evasion risk.
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Fix:
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Immediately pay RCM + interest.
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Backdate self-invoice and payment voucher.
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Claim ITC only if still within timeline.
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❌ Paid RCM But Forgot to Claim ITC
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Fix:
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You can claim ITC until 30th Nov of next FY or before filing Annual Return, whichever is earlier.
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RCM on Rent – Sample Illustration
| Particulars | Amount (₹) |
|---|---|
| Rent Amount | 1,00,000 |
| RCM GST @18% | 18,000 |
| Total paid to landlord | 1,00,000 (no GST) |
| RCM paid to Govt | 18,000 (cash) |
| ITC claimed | 18,000 |
Most Asked Questions
Q1. What evidence proves a GSTIN is inactive?
Screenshot of GST portal search showing "Inactive" or "Cancelled" status with date and time.
Q2. Is ITC valid on GST paid to inactive GSTIN?
No. It is treated as tax collected without authority (Section 32 violation). ITC will be denied.
Q3. Do I need GST registration just for paying RCM?
Yes. Section 24 mandates registration even if total turnover is below ₹20/40 lakhs.
Q4. Can I use ITC to pay RCM?
No. RCM must be paid in cash. ITC can be claimed only after payment.
Q5. What if the landlord’s GSTIN is reactivated later?
You must assess:
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Was GST charged validly during inactive period? (No)
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If you already paid RCM, retain that position with evidence.
Avoid double taxation — seek professional advice.
RCM Risk Controls: Bulletproof Your Process
| Control Area | Safeguard |
|---|---|
| GSTIN Status | Monthly tracking of vendor GSTINs |
| Rent Agreements | Clause that GST applies only if GSTIN is active |
| Vendor Master | Block auto GST booking if landlord GSTIN is inactive |
| Internal Audit | Quarterly check of RCM liabilities and ITC claim |
| Documentation | Auto-folder GSTIN check proofs, rent vouchers, etc. |
Final Takeaway
Your landlord’s GST status affects YOUR compliance.
Paying GST to a non-operational GSTIN = invalid ITC + penalty.
Taking RCM responsibility = lawful ITC + peace of mind.
