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Specimen Lease Deed — Commercial and Industrial Property Format 2026

Specimen lease deed for commercial/industrial property. Format, fit-out, CAM charges, escalation, lock-in, insurance, compliance, RERA.

VS Vikas SharmaTax & Compliance Expert
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Last updated: September 2026Verified against: Government sources

Specimen Lease Deed — explained: this guide covers what Specimen Lease Deed — means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.

Commercial vs Residential Lease — Key Differences

Commercial/industrial leases differ significantly from residential leases: (a) longer terms (5-30 years vs 11 months-3 years), (b) higher deposits (6-12 months' rent), (c) fit-out provisions (tenant's right to modify premises for business use), (d) CAM charges (Common Area Maintenance — significant in commercial properties), (e) compliance obligations (fire safety, factory licenses, pollution control), (f) assignment/sub-lease provisions (more common in commercial), (g) no Rent Control protection in most states (Rent Control Acts typically cover residential tenancies).

Specimen Lease Deed — Commercial Property

DEED OF LEASE — COMMERCIAL PREMISES

Between AND

1. Demised Premises: .

2. Term: [5/9/15] years from to , with option to renew for [2] further terms of [5] years each.

3. Rent: Rs. per month (Rs. per sq. ft. per month × sq. ft.). GST at 18% applicable on rent — payable by the Lessee. TDS at 10% under Section 194-I deducted by the Lessee.

4. Escalation: [15]% increase every [3] years. Alternatively: linked to CPI or market rate review.

5. Security Deposit: Rs. (equivalent to [6-12] months' rent) — interest-free, refundable on vacating.

6. CAM Charges: Rs. per sq. ft. per month — covering: security, housekeeping, common area electricity, lift maintenance, DG backup, water supply. Escalation: [10]% annually or actual cost basis.

7. Fit-Out: The Lessee may carry out interior fit-out at their own cost — subject to: (a) Lessor's prior written approval for structural changes, (b) compliance with building regulations, (c) obtaining necessary municipal/fire approvals. On termination: the Lessee shall restore the premises to original condition — or forfeit the fit-out to the Lessor (as mutually agreed).

8. Permitted Use: . The Lessee shall NOT use for any illegal, hazardous, or prohibited purpose. The Lessee shall obtain all necessary licenses (shops & establishments, fire NOC, factory license for industrial use).

9. Lock-In: [3] years — neither party shall terminate during the lock-in period except by mutual consent or for material breach.

10. Termination: After lock-in: [6] months' written notice by either party. Immediate termination for: non-payment (3 consecutive months), illegal use, insolvency, material breach.

11. Insurance: Lessor: structure insurance. Lessee: contents insurance, public liability insurance, and fit-out insurance.

12. Compliance: The Lessee shall comply with all applicable laws: (a) fire safety regulations, (b) environmental/pollution norms, (c) labour laws (for factories), (d) municipal bye-laws, (e) GST registration for the premises.

13. Assignment/Sub-Lease: Not permitted without Lessor's prior written consent — which shall not be unreasonably withheld for reputable assignees.

Registration and Stamp Duty

Commercial leases exceeding 1 year: MANDATORY registration. Stamp duty: typically higher than residential — based on total rent + premium + CAM charges for the entire term. Some states: stamp duty on the AVERAGE annual rent × term years. GST on rent: 18% (commercial property is not exempt from GST unlike residential — residential rent was exempted only for individuals not registered under GST).

Disclaimer: This article is for informational purposes only and does not constitute legal or professional advice. While every effort has been made to ensure accuracy based on the latest laws and amendments, readers should consult a qualified professional before acting on any information provided. For expert assistance, contact us.

Quick recapKey facts & short answers

Key Facts About Specimen Lease Deed —

  • Applies in: All states across India, under the relevant central law.
  • Mode: Mostly online via the official government portal.
  • Typical timeline: Ranges from a few days to a few weeks depending on the case.
  • Non-compliance: May attract penalties, interest or late fees.
  • Expert help: TaxClue completes Specimen Lease Deed — end to end for you.

What is CAM and how is it structured in commercial leases?

CAM (Common Area Maintenance) covers shared building services: (1) SECURITY — guards, CCTV, access control, (2) HOUSEKEEPING — common areas cleaning, waste management, (3) ELECTRICITY — common area lighting, lifts, AC in lobbies, (4) DG BACKUP — diesel generator for power backup, (5) WATER — common water supply and treatment, (6) MAINTENANCE — lifts, fire systems, structural maintenance. Typically: Rs. 8-25 per sq. ft. per month (varies by grade of building). Escalation: 10% annually or ACTUAL COST basis (open-book — landlord shares cost breakup). CAM is SEPARATE from rent — always specify both amounts clearly.

Is GST applicable on commercial rent?

YES — 18% GST applies on rent of COMMERCIAL property (office, retail, warehouse, industrial). The landlord charges GST on the rent invoice — the tenant pays rent + 18% GST. The tenant can claim INPUT TAX CREDIT on the GST paid (if registered under GST and the premises are used for business). For RESIDENTIAL property: rent is exempt from GST when the property is rented TO an individual for personal use (Notification 04/2022). However: if residential property is rented to a REGISTERED person (company/firm): GST applies on reverse charge basis. Always clarify GST applicability and who bears it in the lease deed.

Specimen Lease Deed —: a key compliance topic in Indian tax and corporate law that businesses and individuals must understand to remain compliant.

READY DRAFTCommercial / Industrial Lease Deed — Deed Format

A registrable lease deed for commercial or industrial premises setting out term, rent, escalation, security deposit, permitted use and termination, executed between lessor and lessee.

LEASE DEED

(Commercial / Industrial Premises)

THIS DEED OF LEASE is made at [City] on this [Day] day of [Month], 2026, BETWEEN:

[Name of Lessor], S/o [___], residing at [Address] (hereinafter the "Lessor"), of the ONE PART; AND

[Name of Lessee / Company through its authorised signatory], having its office at [Address] (hereinafter the "Lessee"), of the OTHER PART.

Clause 1. Demised Premises. The Lessor hereby leases to the Lessee the [commercial unit / industrial shed] admeasuring [__] sq. ft. super built-up area, being [Unit/Plot No. ___] at [full address] (the "Premises"), more fully described in the Schedule.

Clause 2. Term. The lease is for a term of [__] years commencing from [DD/MM/YYYY] and expiring on [DD/MM/YYYY], with a lock-in period of [__] months and an option to renew for a further [__] years on mutually agreed terms.

Clause 3. Rent. The Lessee shall pay a monthly rent of ₹[amount] (Rupees [in words] only), payable in advance on or before the [5th] day of each English calendar month, plus applicable GST.

Clause 4. Escalation. The monthly rent shall escalate by [__]% every [12] months / at the end of every [3] years over the last-paid rent.

Clause 5. Security Deposit. The Lessee has paid an interest-free refundable security deposit of ₹[amount] (equal to [__] months\' rent), refundable on expiry/termination after adjusting arrears and damages (fair wear and tear excepted).

Clause 6. Permitted Use. The Premises shall be used only for [office / manufacturing of ___ / warehousing] and for no other purpose, in compliance with all applicable laws, factory/trade licences and pollution norms.

Clause 7. Outgoings & Utilities. The Lessee shall pay electricity, water and other consumption charges on actuals; municipal property tax shall be borne by the [Lessor], and maintenance/CAM charges by the [Lessee].

Clause 8. Repairs. Structural/major repairs shall be the Lessor\'s responsibility; day-to-day and internal repairs shall be the Lessee\'s.

Clause 9. Assignment / Sub-letting. The Lessee shall not assign, sub-let or part with possession of the Premises without the prior written consent of the Lessor.

Clause 10. Alterations. The Lessee may carry out non-structural interior fit-outs at its cost with prior written consent, and shall restore the Premises on vacation, unless waived.

Clause 11. Termination. After the lock-in, either party may terminate by giving [3] months\' prior written notice; the Lessor may terminate on the Lessee\'s default in rent for [2] consecutive months or breach of any material term.

Clause 12. Handover. On expiry/termination the Lessee shall hand over vacant, peaceful possession of the Premises in good condition, fair wear and tear excepted.

Clause 13. Registration & Stamp Duty. This Deed shall be registered and the stamp duty and registration charges shall be borne by the [Lessee / equally].

Clause 14. Dispute Resolution. Disputes shall be referred to arbitration by a sole arbitrator under the Arbitration and Conciliation Act, 1996; the seat shall be [City] and courts at [City] shall have exclusive jurisdiction.

SCHEDULE OF PREMISES
[Unit/Plot No. ___], admeasuring [__] sq. ft., situated at [full address], bounded North — [___]; South — [___]; East — [___]; West — [___].

IN WITNESS WHEREOF the parties have executed this Lease Deed on the day, month and year first above written.

____________________
LESSOR		____________________
LESSEE
(Authorised Signatory)

WITNESSES: 1. ______________    2. ______________

▸ How to use & important notes
  • A lease of immovable property from year to year, or for a term exceeding one year, must be by a registered instrument under Section 107 of the Transfer of Property Act 1882 and Section 17 of the Registration Act 1908.
  • Stamp duty on a lease is ad valorem on the average annual rent plus the security deposit/premium and varies by State — verify the exact slab and the deposit-loading rule before execution.
  • Rent for commercial/industrial letting attracts GST at 18% (forward charge if the lessor is registered); state the GST clause and, for high-value rent, keep TDS under Section 194-I in mind.
  • Spell out the lock-in, escalation and security-deposit refund mechanics precisely — these are the clauses most disputes turn on.

Disclaimer: This is a general-purpose template for reference only. Facts, figures, stamp duty and clauses vary with your situation and state law — have it reviewed before use. Need this professionally drafted, stamped and filed? Talk to a TaxClue expert.

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Disclaimer: This article is for general informational purposes only and does not constitute professional tax, legal or financial advice. Laws, rates and due dates change and can vary by individual case — always verify with the relevant government source (e.g. mca.gov.in, incometax.gov.in) or consult a qualified professional before acting. TaxClue accepts no liability for decisions taken based on this content.

People also ask

Questions, answered

Short, direct answers to the 5 questions readers ask most on this topic.

CAM (Common Area Maintenance) covers shared building services: (1) SECURITY — guards, CCTV, access control, (2) HOUSEKEEPING — common areas cleaning, waste management, (3) ELECTRICITY — common area lighting, lifts, AC in lobbies, (4) DG BACKUP — diesel generator for power backup, (5) WATER — common water supply and treatment, (6) MAINTENANCE — lifts, fire systems, structural maintenance. Typically: Rs. 8-25 per sq. ft. per month (varies by grade of building). Escalation: 10% annually or ACTUAL COST basis (open-book — landlord shares cost breakup). CAM is SEPARATE from rent — always specify both amounts clearly.

YES — 18% GST applies on rent of COMMERCIAL property (office, retail, warehouse, industrial). The landlord charges GST on the rent invoice — the tenant pays rent + 18% GST. The tenant can claim INPUT TAX CREDIT on the GST paid (if registered under GST and the premises are used for business). For RESIDENTIAL property: rent is exempt from GST when the property is rented TO an individual for personal use (Notification 04/2022). However: if residential property is rented to a REGISTERED person (company/firm): GST applies on reverse charge basis. Always clarify GST applicability and who bears it in the lease deed.

Typical lock-in: 3-5 YEARS for Grade A commercial. During lock-in: NEITHER party can terminate (except for material breach or mutual consent). If a party terminates during lock-in: they must pay the OTHER party a PENALTY — typically: remaining lock-in rent (e.g., if 2 years of lock-in remain: penalty = 24 months' rent). Lock-in protects: (a) the LANDLORD — ensures stable rental income and justifies fit-out investments, (b) the TENANT — ensures the landlord cannot arbitrarily terminate. After lock-in: either party can terminate with the agreed NOTICE PERIOD (typically 6 months).

Typically the TENANT: (1) the tenant designs and constructs the interior fit-out at their cost, (2) the landlord may provide a 'vanilla shell' — basic structure with floor, ceiling grid, HVAC points, electrical points, (3) the tenant pays for: partitions, flooring, furnishing, IT infrastructure, signage, (4) fit-out period: landlord may grant a RENT-FREE period (1-3 months) for the tenant to complete fit-out before business operations begin. On TERMINATION: (a) the tenant restores the premises to original condition (most common), OR (b) the tenant leaves the fit-out and the landlord takes it over (sometimes with a payment). The lease must clearly specify the restoration obligation.

Varies by state — typically based on: (1) Total RENT for the entire lease term (monthly rent × number of months), (2) PREMIUM/deposit — treated as advance rent in some states, (3) CAM charges — some states include CAM in the calculation. Example (Maharashtra): stamp duty = 0.25% of (total rent + deposit + CAM for the term). For a 5-year lease at Rs. 5 lakh/month + Rs. 30 lakh deposit: total = Rs. 3 crore rent + Rs. 30 lakh deposit = Rs. 3.3 crore → stamp duty ≈ Rs. 82,500. Delhi: 2% of average annual rent. Karnataka: 1% of total rent. Always check the state schedule — commercial lease stamp duty can be significant.

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