GST on Rent in India

Working out the GST on rent

Commercial rent is taxed at 18%, and the calculator below uses that rate. Residential rent to an individual for personal use is exempt, and some cases shift the liability to the tenant under reverse charge, so identify the scenario before you apply a rate. Multiply the taxable value by 18 percent to get the GST, then add it to the base price for the total.

• For an intra-state sale, the 18% splits into 9% CGST and 9% SGST.
• For an inter-state sale, a single 18% IGST applies instead.
• The calculator on this page is pre-set to the 18% rate and handles both cases.

A worked example

Suppose a monthly commercial rent has a taxable value of ₹50,000 before tax. Applying 18% GST works out as follows.

GST on rent depends on who rents what

Rent is one of the most misunderstood areas of GST, because the rate turns on three things: whether the property is commercial or residential, and the registration status of both landlord and tenant. Renting immovable property is a supply of service under SAC 9972. The table sets out the main scenarios.

Renting commercial property: the practical position

Rent of commercial property, meaning shops, offices, warehouses, godowns and factory space, attracts 18% GST under SAC 9972. The landlord charges it on the rent and the tenant pays it, but for a GST-registered tenant the tax is rarely a real cost: the 18% comes back as input tax credit against their output liability, provided the premises are used for taxable business supplies. That credit flow is the whole reason commercial rent GST is less painful than the headline number suggests.

Two things sit outside the rent line and are worth checking on the invoice. A refundable security deposit is not consideration and is not taxable, unless it gets adjusted against rent, at which point the adjusted amount becomes taxable. And where the landlord recovers electricity, water or society maintenance separately, the treatment depends on whether they are acting as a pure agent recovering actual cost or simply bundling charges into the letting, so those lines should be itemised rather than folded into a single rent figure.

Where a landlord's aggregate rental income stays below ₹20 lakh a year they need not register, and no GST is charged. Above it, registration is mandatory and 18% applies. For a tenant, that means an unregistered landlord's rent carries no GST but also gives you no credit, while a registered landlord's rent carries 18% that you can usually reclaim. On commercial property let by an unregistered landlord to a registered tenant, reverse charge can shift the liability to the tenant, which is the 2024 change covered above.

The residential rent trap for businesses

Since 18 July 2022, if a GST-registered company, firm or proprietorship rents a residential property, even to house an employee or as a guest house, the tenant must pay 18% GST under the reverse charge mechanism. The landlord does not need to be registered for this to apply. The one carve-out is a registered sole proprietor renting a home in their personal capacity for their own family, paid from personal funds. This rule caught many businesses off guard, so check any residential lease held in a business name.

The 2024 commercial rent change

From 10 October 2024, a second reverse-charge rule was added. If a registered business rents commercial space from an unregistered landlord, the tenant must now pay 18% GST directly to the government under RCM. Many businesses only discovered this when notices began arriving. The tenant self-invoices and can usually claim the same amount back as input tax credit.

Input tax credit and the ₹20 lakh threshold

ITC on commercial rent is fully claimable when the property is used for business, whether the GST was paid by forward charge or RCM. ITC on residential rent under RCM is often blocked if the department treats it as a personal benefit for employees. A landlord only needs to register and charge GST once total rental income crosses 20 lakh a year (10 lakh in special category states). Separately, RWA maintenance charges are exempt up to 7,500 per month per flat, and a refundable security deposit is not taxable unless adjusted against rent.

GST and TDS are separate obligations

These get confused constantly. TDS under Section 194-I of the Income Tax Act applies at 10% and is deducted by the tenant from the payment. The threshold was raised by Budget 2025, with effect from 1 April 2025, from ₹2,40,000 a year to ₹6,00,000 a year (₹50,000 a month), so a great many small commercial tenancies fell out of TDS altogether. Individuals and HUFs outside audit deduct under Section 194-IB instead, which has its own ₹50,000-a-month trigger. GST is an indirect tax charged on top of the rent. They are different taxes under different laws, and crucially TDS is calculated on the pre-GST rent amount, not on the GST-inclusive total. A tenant paying ₹1,00,000 rent deducts ₹10,000 TDS on the rent and separately handles ₹18,000 of GST.

Co-working spaces and sub-letting

A co-working operator leases a building and sub-lets desks, which is itself a renting-of-immovable-property service taxed at 18%. The operator charges 18% to members and claims ITC on the rent paid to the building owner, so the credit chain flows through cleanly. A member using the desk for business can claim the 18% as ITC in turn. Sub-letting by an ordinary tenant works the same way if the sub-let is commercial.

Joint owners and mixed-use property

Where a property is jointly owned, the ₹20 lakh registration threshold is generally assessed per co-owner on their share of the rent rather than on the total, which can keep individual owners below the threshold. Use decides treatment, not the building's nature: a residential flat rented out as an office loses the residential exemption and attracts 18%. A refundable security deposit is not taxable unless it is adjusted against rent, at which point the adjusted amount becomes consideration and is taxed.

Frequently asked questions