GST on Rent: Commercial & Residential Property Rules (2026)
Is GST applicable on rent? 18% on commercial property, residential rent RCM rules post-July 2022, ITC availability, and practical examples for businesses.
Reviewed by Vikram Mehta
Chartered Accountant · ICAI FRN 142087W
The GST treatment of rent is one of the most confusing areas for Indian businesses. Is rent exempt? When does reverse charge apply? Can I claim ITC on rent paid? The answer depends on whether the property is commercial or residential, and who the tenant is.
This guide clarifies the rules after the July 2022 amendment that changed everything for residential property rent.
Quick Summary: GST on Rent
| Scenario | GST Rate | Who Pays | ITC Available? |
|---|---|---|---|
| Commercial property → Any tenant | 18% | Landlord (forward charge) | Yes (tenant can claim) |
| Residential property → Unregistered tenant | Exempt | No GST | N/A |
| Residential property → Registered tenant (for business) | 18% | Tenant (reverse charge) | Yes (but see note) |
| Residential property → Registered tenant (for personal use) | 18% RCM | Tenant (reverse charge) | No (personal use) |
Commercial Property Rent
This is straightforward:
- Landlord charges 18% GST on rent if their aggregate turnover exceeds ₹20 lakh
- Landlord must be registered and issue a tax invoice with GSTIN
- Tenant claims ITC on rent (GSTR-2B → GSTR-3B Table 4)
- SAC code: 997212 (rental of commercial property)
What If Landlord Is Unregistered?
If the commercial landlord's turnover is below ₹20 lakh and they're not registered, no GST applies. The tenant cannot claim ITC (no tax invoice available). Consider requesting the landlord to register voluntarily.
Residential Property Rent (Post-July 2022)
The 47th GST Council meeting (June 2022) introduced a major change effective July 18, 2022:
- Before: All residential rent was exempt from GST (regardless of who the tenant is)
- After: If the tenant is a registered person, GST at 18% applies under reverse charge (tenant pays)
When Does 18% RCM on Residential Rent Apply?
- The property must be residential
- The tenant must be GST registered (has a GSTIN)
- The landlord can be registered or unregistered — doesn't matter
Common scenario: A company rents a flat for its employee as part of CTC. The company (registered) must pay 18% GST under RCM on the rent, even though the landlord is an individual with no GSTIN.
Can You Claim ITC on Residential Rent RCM?
This depends on the purpose:
- Used for business: ITC available (e.g., company guest house for client visits)
- Used for personal accommodation of employees: ITC blocked under Section 17(5)(g) — "membership of a club, health and fitness centre, and... rent-a-cab, life insurance and health insurance" and personal consumption
- Key ruling: If the company provides housing as part of employment terms and it's for business purposes (mandatory quarters, deputation), many experts argue ITC should be available. But this is a grey area with conflicting advance rulings.
If your company rents a flat for an employee as part of CTC, you pay 18% RCM — but ITC is likely blocked under Section 17(5)(g) since it's personal accommodation. Your effective rental cost increases by 18%.
GST on Rent: Practical Examples
Example 1: Shop Rent
Landlord (registered) rents shop to retailer for ₹50,000/month
GST: ₹50,000 × 18% = ₹9,000 (landlord charges on invoice)
Retailer claims ₹9,000 as ITC ✅
Example 2: Company Rents Flat for Employee
Individual landlord (unregistered) rents flat to ABC Pvt Ltd for ₹30,000/month
GST: ₹30,000 × 18% = ₹5,400 (company pays under RCM)
ITC claim: Likely blocked (personal use of employee) ❌
Company's cost: ₹35,400/month effective
Example 3: Freelancer Rents Flat as Office
Individual landlord rents flat to registered freelancer who uses it as office
GST: Rent × 18% under RCM (freelancer pays)
ITC claim: Available (business use) ✅
But: If same flat is used partly residential, proportional ITC only
Track RCM on rent automatically
1010 auto-detects reverse charge obligations on rental payments and creates self-invoices — ensuring you never miss an RCM liability.
Try 1010 FreeReporting in GST Returns
| Scenario | Landlord Reports | Tenant Reports |
|---|---|---|
| Commercial rent (forward charge) | GSTR-1 as outward supply | ITC in GSTR-3B Table 4(A)(5) |
| Residential rent (RCM) | Nothing (or exempt supply) | GSTR-3B Table 3.1(d) + ITC in 4(A)(3) |
Frequently Asked Questions
Is GST applicable on residential rent?
Only if the tenant is a registered person (has GSTIN). For unregistered individuals renting for personal use, residential rent remains exempt.
What is the GST rate on commercial rent?
18% on forward charge. The landlord charges it on the invoice if they're registered and above the ₹20 lakh threshold.
Can a company claim ITC on office rent?
Yes, ITC on commercial office rent is fully claimable. It appears in GSTR-2B and you claim it in GSTR-3B Table 4.
Who pays GST on residential rent — landlord or tenant?
The tenant pays under reverse charge mechanism. The landlord doesn't charge GST on the invoice.
🛠️ Free Tools Related to This Article
One missed GSTR-3B deadline = ₹50/day in late fees. Every. Single. Day.
1010 auto-prepares your return and reminds you 5 days before the deadline.
Never Miss a Deadline — No Credit Card