GST Rate on Rent: The Simple Answer
The GST rate on rent in India depends on the type of property being rented:
| Property Type | GST Rate | Notes |
|---|---|---|
| Commercial property | 18% | Offices, shops, warehouses, godowns |
| Residential (personal use) | Exempt (0%) | Individual tenant, personal residence |
| Residential (to GST-registered business) | 18% (RCM) | Since July 2022, tenant pays under RCM |
| Hotel/hostel (daily tariff ≤ ₹1,000) | 12% | Lodging services |
Residential Rent: When Is It Exempt?
Residential property rent is exempt from GST under Notification No. 12/2017 when:
- The property is used for residential/personal purposes
- The tenant is an individual (not a GST-registered business)
- The tenant is using the property as their own dwelling
This means if you're a salaried professional renting a flat for personal use, your landlord does not charge GST on rent — regardless of the rent amount.
The July 2022 Exception: Residential + Business Tenant
In a significant change effective 18th July 2022, the GST Council ruled that when a GST-registered person or company rents a residential property, GST at 18% applies under the Reverse Charge Mechanism.
This commonly applies when:
- A company rents flats for employees
- A GST-registered freelancer rents a flat and uses part of it as office
- A startup uses a residential property as its office address
Under RCM, the tenant pays 18% GST directly to the government. The landlord does not collect GST.
Commercial Rent: 18% GST Explained
For all commercial properties, GST at 18% is straightforward:
- Landlord issues a tax invoice showing rent + 18% GST
- Tenant pays the total amount
- Tenant claims Input Tax Credit (ITC) on the GST paid
- Landlord reports the transaction in GSTR-1
Example: Monthly Commercial Rent
If your office rent is ₹50,000/month:
- GST at 18%: ₹9,000
- Total monthly payment: ₹59,000
- Annual GST on rent: ₹1,08,000 (claimable as ITC)
Landlord's GST Registration Threshold
A landlord must register for GST and collect GST on rent only if their aggregate annual turnover exceeds ₹20 lakhs (₹10 lakhs for special category states like the Northeast, Himachal Pradesh, Uttarakhand, etc.).
If a landlord earns ₹15 lakhs/year from commercial rent and has no other income, they are not required to register for GST or charge GST on rent.
GST on Rent vs TDS on Rent
These are two separate obligations that can apply simultaneously:
| Aspect | GST on Rent | TDS on Rent |
|---|---|---|
| Governed by | GST Act | Income Tax Act |
| Rate | 18% | 5% or 10% |
| Who pays? | Landlord collects, tenant pays | Tenant deducts from rent |
| Applies on | Rent amount | Rent amount (excluding GST, if shown separately) |
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