"No GST even if proprietor or partner of a firm rents residence for personal use," the Press Information Bureau said in a social media post.

This is welcome clarification by the government that will prevent unnecessary panic where people were under the false belief that residential renting of immovable property to unregistered persons would also attract GST, said Abhishek Jain, Partner Indirect Tax at KPMG in India.

"More importantly, this clarification provides the much needed relief to GST registered proprietors or partners in GST registered firms who take on rent immovable property for their personal use, e.g. renting of a house for family accommodation, in which case the government has rightly clarified that GST will not be applicable," explained Jain.

The interpretation of law since beginning was very clear that GST was payable under reverse charge mechanism when the residential property is being leased by a GST registered person (ie entity carrying out business / profession or an association, etc). The clarification from CBIC would help in settling the dust around this issue, explained Saurabh Agarwal, Tax Partner at EY.