Renting out property is a common source of income in India. But do you know that in some cases, Goods and Services Tax (GST) is applicable on rent too?
If you are a landlord, tenant, or business owner, it’s important to understand when and how GST applies on rent. In this blog on GST on Rent, we’ll cover everything in simple terms.
GST on Rent – Basic Rule
GST is not applicable on all types of rent. It depends on two things:
- The type of property (residential or commercial)
- The purpose of renting (personal use or business use)
Types of Rent and GST Applicability
| Type of Property | Purpose of Use | GST Applicable? |
| Residential Property | For personal use | ❌ No GST |
| Residential Property | Rented to business | ✅ Yes, under RCM |
| Commercial Property | For business use | ✅ Yes |
| Commercial Property | For personal use | ✅ Yes |
GST Rate on Rent
The GST rate on rent is generally 18% under SAC code 997212 (rental or leasing services involving own or leased non-residential property).
When GST Registration is Mandatory for Landlord
A landlord must register under GST if:
- Total rental income (taxable) exceeds ₹20 lakhs per annum (₹10 lakhs in special category states).
- The property is rented for commercial/business purposes.
🚨 Important: If the landlord’s total taxable income (from all sources) is below ₹20 lakhs, GST registration is not mandatory.
Rented to Registered Business – Who Pays GST?
As per Reverse Charge Mechanism (RCM):
- If a residential property is rented to a registered business, then tenant (business) has to pay GST under RCM.
- In all other cases (like commercial property), landlord charges GST on invoice and pays it to the government.
GST on Residential Property Given on Rent
| Scenario | GST Applicability |
| Rented to individual for personal use | ❌ Not Applicable |
| Rented to business for office or staff housing | ✅ Yes, under RCM |
Example: Mr. A rents his flat to a company for their manager’s accommodation. Company is GST registered. In this case, the company pays GST under RCM.
GST on Commercial Property Given on Rent
GST is always applicable when a commercial property (shop, office, warehouse) is rented out, subject to landlord being registered.
- Landlord issues GST invoice with 18% GST.
- Tenant (if registered) can claim ITC on rent.
Input Tax Credit (ITC) on Rent
- If tenant is a registered business, they can claim ITC on GST paid on rent (used for business).
- ITC is not allowed if property is used for personal or non-business purposes.
Summary of Key Points
| Particulars | GST Applicable | GST Paid By |
| Residential Property for personal use | No | – |
| Residential Property to business (registered) | Yes (RCM) | Tenant |
| Commercial Property to business | Yes | Landlord |
| Landlord’s turnover < ₹20 lakh | No | – |
Conclusion
GST on rent depends on nature of property and purpose of rent. If you are renting a property or taking one on rent, ensure to comply with the GST rules and issue proper invoices.
