New GST Rate on Commercial Property Sales and Leasing
Whether you’re buying a shop, renting office space, or leasing a warehouse, understanding the GST implications is crucial. Unlike residential properties, commercial properties are fully taxable under GST. This guide explains the gst rate on commercial property, its impact on buying, renting, and leasing, and how it differs from residential spaces.
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Is GST Applicable on Commercial Property?
Yes. Under GST, the sale or lease of commercial properties such as shops, offices, showrooms, warehouses, and commercial complexes is taxable. However, the gst rate on commercial property depends on whether the unit is under construction or ready-to-move.
New GST Rate on Interior Design Services in India
The Government of India is updating GST rates effective after 22 Sep 2025. Below are the expected new GST rates for Interior Design Services taxpayers by business type (no compensation cess).
| Property Type | New GST Rate | Condition |
|---|---|---|
| Under-construction commercial property | 5% | With Input Tax Credit (ITC) allowed |
| Ready-to-move commercial property | Exempt | If Completion Certificate (CC) is issued |
Old GST Rate for Commercial Property Sales
(Old GST Rates – Applicable Until 21st September)
| Property Type | Old GST Rate | Condition |
|---|---|---|
| Under-construction commercial property | 12% | With Input Tax Credit (ITC) allowed |
| Ready-to-move commercial property | Exempt | If Completion Certificate (CC) is issued |
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New GST on Commercial Property Leasing
| Type of Lease | New GST Rate |
|---|---|
| Office space, shops, warehouses | 18% |
| Long-term lease with upfront premium | 18% |
| Commercial land lease (business use) | 18% |
Old GST on Commercial Property Leasing
| Type of Lease | Old GST Rate |
|---|---|
| Office space, shops, warehouses | 18% |
| Long-term lease with upfront premium | 18% |
| Commercial land lease (business use) | 18% |
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Input Tax Credit on Commercial Properties
- Construction-related services (for buyers)
- Monthly rent paid with GST (for tenants)
- Interior or fit-out expenses
- Maintenance and repair charges (if taxed)
Businesses registered under GST can claim Input Tax Credit to reduce their tax liability.
GST Registration Requirement for Landlords
- Mandatory if rental income exceeds ₹20 lakh annually
- Must collect and pay 18% GST on rent
- Issue proper tax invoices with SAC Code 9972
- File monthly GST returns (GSTR-1, GSTR-3B)
Special Case: Mixed-Use Buildings
If a building has both residential and commercial units, GST is charged only on the commercial portion. Residential units sold after receiving a completion certificate are exempt, while commercial units are fully taxable.
Conclusion
Understanding the gst on commercial property in india helps landlords, investors, and tenants make informed decisions and remain tax-compliant. Whether you’re buying, leasing, or renting, GST must be considered in your cost planning.
