GST on Rent in India 2026: What Landlords & Tenants Must Know

Every month, millions of Indian business owners pay rent for offices, shops, warehouses, and even residential apartments used as registered business addresses — and most of them are confused about one question: Is GST applicable on rent?

The answer is not a simple yes or no. It depends on the type of property (residential or commercial), who the tenant is (individual or registered business), and the landlord's annual turnover. Get it wrong, and you face penalties, interest, and blocked ITC claims.

This 2026 guide explains every scenario clearly — with examples, tables, and a step-by-step invoice guide using SAC code 997212.

Is GST Applicable on Rent? The Quick Answer

GST applicability on rent hinges on two factors: the type of property and the nature of the tenant. Here is the master summary:

Property Type	Tenant Type	GST Applicable?	Who Pays?	Rate
Commercial (shop, office, warehouse)	Any (individual, company, firm)	Yes	Landlord charges, tenant pays	18%
Residential (flat, house)	Individual for personal use	No (Exempt)	—	Nil
Residential (flat, house)	GST-registered business / company	Yes — under RCM	Tenant pays directly (RCM)	18%
Residential (flat, house)	Unregistered individual / business	No (Exempt)	—	Nil

GST on Commercial Rent: 18% Under SAC 997212

Renting a shop, office space, showroom, warehouse, or any commercial property is a taxable supply of service under GST. The applicable rate is 18% under SAC code 997212 (Rental or leasing services involving own or leased non-residential property).

When Does the Landlord Charge GST on Commercial Rent?

The landlord must register for GST and charge 18% GST on rent invoices only if their total annual rental income exceeds ₹20 lakh (₹10 lakh in special category states like Himachal Pradesh, Uttarakhand, Sikkim, etc.).

Landlord's Annual Rental Income	GST Registration Required?	GST on Rent Invoice?
Below ₹20 lakh (most states)	No	No — bill without GST
Below ₹10 lakh (special category states)	No	No — bill without GST
Above ₹20 lakh (most states)	Yes — mandatory	Yes — 18% GST
Any amount — if also conducting other taxable business above threshold	Yes	Yes — 18% GST on rent too

SAC Codes for Rental Services

SAC Code	Description	GST Rate
997211	Rental/leasing of residential property	Exempt (or 18% under RCM in specific cases)
997212	Rental/leasing of non-residential (commercial) property	18%
997213	Rental/leasing of land	18%
997219	Other rental services involving immovable property	18%

GST on Residential Rent: Exempt — But With a Big Exception

Renting a residential dwelling for use as a personal residence is exempt from GST under Notification No. 12/2017-Central Tax (Rate). This has not changed in 2026.

However, a significant amendment effective from 18 July 2022 introduced GST on residential rent under RCM in a specific scenario — and it continues to apply in 2026.

The RCM Rule: Residential Rent to a Registered Business

If a GST-registered person (company, LLP, partnership, or a registered individual proprietor) takes a residential property on rent — even if that property will be used as an employee guest house or accommodation — then:

• GST at 18% applies on the rent
• The tenant pays GST under RCM (Reverse Charge Mechanism) directly to the government
• The landlord does not charge or collect GST — and does not need GST registration for this purpose
• The tenant must self-invoice the transaction under RCM

Summary: Residential Rent GST Scenarios

Tenant	Property Used As	GST?	Mechanism
Individual (not GST-registered)	Own residence	No	Exempt
Individual (GST-registered proprietor)	Employee guest house / office	Yes — 18%	RCM — tenant pays
Company / LLP / Firm (registered)	Employee accommodation / guest house	Yes — 18%	RCM — company pays
Company / LLP / Firm (registered)	Registered office address	Yes — 18%	RCM — company pays
Unregistered business / individual	Any residential use	No	Exempt

Who Pays GST on Rent — Landlord or Tenant?

This depends entirely on the type of property and the applicable mechanism:

Forward Charge (Commercial Rent)

For commercial properties, the normal forward charge mechanism applies:

• Landlord issues a GST invoice for rent amount + 18% GST
• Tenant pays the total (rent + GST) to the landlord
• Landlord deposits the collected GST with the government via GSTR-3B
• Tenant can claim ITC on the GST paid (if registered)

Reverse Charge Mechanism — RCM (Residential Rent to Registered Business)

For residential properties rented to registered businesses:

• Landlord issues a simple rent receipt/invoice without GST
• Tenant calculates 18% GST on the rent amount themselves
• Tenant creates a self-invoice (RCM invoice) in their own records
• Tenant pays the GST directly to the government (in GSTR-3B, Table 3.1(d))
• Tenant can simultaneously claim ITC on the GST paid under RCM (if property used for business)

How to Raise a Proper GST Invoice for Rent (SAC 997212)

A GST invoice for commercial rent must contain all the mandatory fields prescribed under Rule 46 of the CGST Rules, 2017. Here is what to include:

Mandatory Fields on a Rent GST Invoice

Field	Details
Invoice Number	Sequential, unique (e.g., RENT/2026-27/001)
Invoice Date	Date of issue
Landlord's Name & Address	Full registered name and address
Landlord's GSTIN	15-digit GST Identification Number
Tenant's Name & Address	Full name and address of the renting business
Tenant's GSTIN	If tenant is registered (include for ITC claims)
Description of Service	"Rental of commercial premises at [address] for [month/period]"
SAC Code	997212 (for commercial property rental)
Taxable Value	Monthly rent amount (e.g., ₹50,000)
CGST @ 9%	₹4,500 (intra-state)
SGST @ 9%	₹4,500 (intra-state)
IGST @ 18%	Applicable if landlord and tenant are in different states
Total Amount	Rent + GST (e.g., ₹59,000)
Place of Supply	State where the property is located

ITC on Rent Paid — Can Tenants Claim It?

Input Tax Credit (ITC) on rent is one of the most valuable tax savings available to businesses. Here is the full picture:

ITC on Commercial Rent (Forward Charge)

If you pay GST on commercial rent (landlord charges you 18% GST), you can claim the full GST as ITC — provided:

• You are a GST-registered business
• The property is used for business purposes
• You have a valid GST invoice from the landlord with their GSTIN
• The landlord has filed GSTR-1 and the invoice appears in your GSTR-2B

ITC on Residential Rent Under RCM

When you pay GST under RCM on residential rent, you can also claim ITC — but with an important condition:

Rent Type	GST Paid By	ITC Available?	Condition
Commercial rent (forward charge)	Tenant to landlord	Yes — full ITC	Valid invoice + GSTR-2B match
Residential rent to company (RCM)	Tenant directly to govt	Partially — depends on use	Blocked if used for employee personal residence
Residential rent — individual tenant	None (exempt)	Not applicable	—

Practical Examples: Shop, Office, and Flat Rented to a Company

GST Registration Threshold for Landlords

Many landlords with multiple properties wonder whether they need to register. The rules are straightforward:

State Category	Threshold for GST Registration
Most states (Maharashtra, Karnataka, Delhi, Tamil Nadu, etc.)	₹20 lakh aggregate turnover
Special category states (Himachal Pradesh, Uttarakhand, Sikkim, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura, Meghalaya, Assam, J&K)	₹10 lakh aggregate turnover

Penalties for Non-Compliance

Both landlords and tenants can face penalties for getting GST on rent wrong. Here is what to watch out for:

Violation	Who Is Affected	Penalty / Consequence
Landlord fails to register despite crossing ₹20 lakh threshold	Landlord	10% of tax due (min ₹10,000); 100% if intent to evade
Landlord registered but does not charge GST on commercial rent invoices	Landlord	Tax demand + 18% interest p.a. + penalty up to 100% of tax
Registered tenant fails to pay GST under RCM on residential rent	Tenant	Tax demand + 18% interest p.a. + penalty up to 100% of tax
Tenant claims ITC on blocked credit (employee residence)	Tenant	Reversal of ITC + interest + penalty equal to ITC amount
Late filing of GSTR-1 / GSTR-3B (for rent GST)	Landlord / Tenant	₹50/day late fee (₹20/day for nil return)
Not issuing proper GST invoice (missing SAC, GSTIN, etc.)	Landlord	Penalty up to ₹25,000 per invoice
Late payment of GST	Landlord / Tenant (RCM)	18% interest per annum on outstanding amount

Frequently Asked Questions

Is GST applicable on house rent in India in 2026?

Residential rent paid by an individual for personal use remains fully exempt from GST in 2026. No change has been made to this exemption. The only exception is when a GST-registered business rents a residential property — in that case, 18% GST applies under RCM, payable by the tenant directly.

What is the GST rate on commercial rent?

Commercial rent attracts 18% GST — split as 9% CGST + 9% SGST for intra-state transactions, or 18% IGST for inter-state transactions. The SAC code is 997212. This rate applies to shops, offices, warehouses, showrooms, factory sheds, and all non-residential properties.

What is SAC code 997212?

SAC code 997212 is the Services Accounting Code for rental or leasing services involving own or leased non-residential property. It must be mentioned on every GST invoice raised by a landlord for commercial rent. The full SAC classification also includes sub-codes for residential (997211), land (997213), and other immovable property (997219).

Who pays GST on rent — landlord or tenant?

For commercial rent: the landlord collects 18% GST from the tenant and pays it to the government (forward charge). For residential rent to a registered business: the tenant pays GST at 18% directly to the government under RCM — the landlord does not collect or deposit this GST.

Can a company claim ITC on residential rent paid under RCM?

It depends on how the property is used. If the residential property is used as a business guest house for official purposes, ITC may be claimed. If it is used as an employee personal residence, ITC is blocked under Section 17(5)(g) of the CGST Act. Consult a CA to determine the correct treatment based on actual usage.

Does a landlord earning only rental income need GST registration?

Only if total annual rental income from commercial properties exceeds ₹20 lakh (₹10 lakh in special category states). Below this threshold, no registration is required and no GST is charged on rent invoices. Residential rent income alone (to individuals) does not count toward the threshold since it is exempt supply.

Is GST applicable on rent paid to an unregistered landlord?

For commercial rent from an unregistered landlord: if the landlord's turnover is below ₹20 lakh, no GST applies. For residential rent from an unregistered landlord to a registered business: yes, GST at 18% still applies under RCM — the tenant must calculate and pay it even though the landlord is unregistered. The landlord's registration status does not exempt the tenant from RCM.