GST on Renting of Immovable Property —
18% or Exempt?
The GST rate on commercial and residential property rent, the reverse-charge (RCM) rules for businesses and unregistered landlords, sub-letting, co-working, the registration threshold and when you can claim ITC.
Renting of immovable property is a service taxed at 18% (SAC 9972). Commercial rent is 18% — charged by a registered landlord, or self-paid by the registered tenant under RCM if the landlord is unregistered (since 10 Oct 2024). Residential property let to a GST-registered business attracts 18% under RCM (tenant pays, since 18 Jul 2022). Residential let to an individual for personal use is fully exempt.
GST on Property Rent — Decision Table
Every common renting-of-immovable-property scenario, with the rate, who pays the GST and whether Input Tax Credit is available.
| Scenario | GST? | Rate | Who Pays | ITC |
|---|---|---|---|---|
| Commercial → registered landlord & tenant | Yes | 18% | Landlord (forward charge) | Yes |
| Commercial → unregistered landlord to registered tenant | Yes (RCM) | 18% | Tenant (reverse charge) | Yes |
| Residential → company / LLP / firm | Yes (RCM) | 18% | Tenant (reverse charge) | No · 17(5)(g) |
| Residential → individual (personal use) | No | Nil | — | — |
| Warehouse / godown (business use) | Yes | 18% | Landlord | Yes |
| Sub-letting of commercial property | Yes | 18% | Sub-lessor (forward charge) | Yes |
| Co-working / serviced office space | Yes | 18% | Operator (forward charge) | Yes |
| Landlord turnover below ₹20 lakh | No | Nil | — | — |
| Bare agricultural land | No | Nil | — | — |
SAC 997211 (residential) / 997212 (non-residential/commercial), grouped under SAC 9972. Renting rates were not changed by the GST 2.0 rationalisation effective 22 September 2025 — confirm on the official GST portal before invoicing.
Commercial vs Residential — Which Rule Applies?
Two things decide your GST: the nature of the property (commercial vs residential dwelling) and whether the tenant is a GST-registered business. Get either wrong and you invoice — or self-pay — the wrong tax.
Commercial property — normal ITC
- Shops, offices, showrooms, warehouses, factories
- Landlord charges 18% once turnover crosses ₹20 lakh
- RCM if the landlord is unregistered (since 10 Oct 2024)
- Registered tenant claims full Input Tax Credit
- Sub-letting & co-working also 18%
Residential dwelling
- Let to an individual for living: fully exempt
- Let to a GST-registered business: 18% under RCM
- Tenant self-pays; landlord charges nothing
- ITC on such RCM blocked under Section 17(5)(g)
- Applies even if the landlord is unregistered
Not sure whether your rent is 18%, RCM or exempt?
Get My GST Position →Reverse Charge on Property Rent
RCM shifts the duty to pay GST from the landlord to the registered tenant. On renting of immovable property, two separate RCM rules now apply:
- Residential-to-business (since 18 July 2022): a GST-registered business (company, LLP, firm, proprietor) renting a residential dwelling — for an office, guest house or employee accommodation — self-pays 18% under RCM, even if the landlord is unregistered.
- Commercial from an unregistered landlord (since 10 October 2024): under entry 5AB, when an unregistered person rents any non-residential property to a registered person, the registered tenant self-pays 18% under RCM.
- Composition-scheme relief (since 16 January 2025): taxpayers under the composition scheme are excluded from the commercial-rent RCM, so they do not self-pay on rent from an unregistered landlord.
The RCM GST on a residential flat used for employee accommodation is blocked as ITC under Section 17(5)(g) — you pay it but cannot recover it. Commercial-rent RCM (unregistered landlord) is different: that GST is generally recoverable as ITC. Startups and small firms often miss both triggers.
Renting a flat or office for your business? Get your RCM & ITC position checked.
Talk to a GST Expert →Sub-letting, Co-working & Mixed-use
| Arrangement | Treatment | Rate |
|---|---|---|
| Sub-letting commercial space | Fresh supply of renting service; original rent & sub-let both taxable; sub-lessor claims ITC on rent paid | 18% |
| Co-working / serviced office (pure space) | Renting of immovable property, SAC 9972; operator charges GST; tenant claims ITC | 18% |
| Co-working with bundled services | Composite support service (SAC 9983) — internet, reception, pantry | 18% |
| Mixed-use (part commercial, part residential) | 18% on the commercial portion; residential portion follows residential rules | 18%* |
| Shopping mall / retail unit | Renting of immovable property by the mall owner (forward charge) | 18% |
* Residential portion is exempt if let to an individual, or 18% RCM if let to a registered business. ITC is proportionate.
GST Registration Threshold for Landlords
A landlord must register and charge GST on commercial rent once aggregate turnover (rent + any other business income) exceeds:
- ₹20 lakh/year — most states
- ₹10 lakh/year — special-category states (Manipur, Mizoram, Nagaland, Tripura, etc.)
A landlord with only residential rental income to unregistered individuals stays outside GST entirely, regardless of the rent amount. But note: even an unregistered commercial landlord can trigger RCM on a registered tenant since 10 October 2024.
ITC on Property Rent — When Can You Claim It?
| Scenario | ITC? | Reason |
|---|---|---|
| GST on commercial office / shop rent | Yes | Business use — normal B2B ITC rules |
| RCM GST on commercial rent from unregistered landlord | Yes | Business use — self-pay then claim as ITC |
| RCM GST on residential flat for employees | No | Blocked under Section 17(5)(g) — personal / employee benefit |
| GST on warehouse / godown rent | Yes | Business use (storage) — ITC eligible |
| RCM GST on residential flat as registered office | No* | Generally blocked; AAR rulings are mixed |
* Consult a GST practitioner for registered-office use — advance rulings differ.
18% Commercial rent — ₹1,00,000/mo
18% RCM Residential flat for staff
On commercial rent the 18% is usually a wash — you pay it and reclaim it as ITC. The real cost sits with residential flats taken for staff: that RCM is blocked under 17(5)(g), so it is a genuine out-of-pocket expense many firms forget to budget for.
Frequently Asked Questions
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