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.
GST Rate for Commercial Property Sales
| Property Type | 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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GST on Commercial Property Leasing
| Type of Lease | GST Rate |
|---|---|
| Office space, shops, warehouses | 18% |
| Long-term lease with upfront premium | 18% |
| Commercial land lease (business use) | 18% |
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.
As a Chartered Accountant with over 12 years of experience, I am not only skilled in my profession but also passionate about writing. I specialize in producing insightful content on topics like GST, accounts payable, and income tax, confidently delivering valuable information that engages and informs my audience.
Frequently Asked Questions (FAQs)
- What is the GST rate on commercial property sales in India?12% GST applies to under-construction commercial properties. No GST is charged if the property is sold after obtaining a completion certificate.
- What is the GST rate for commercial property leasing?Renting commercial property attracts 18% GST.
- Can businesses claim ITC on commercial rent or property purchases?Yes, Input Tax Credit is available on GST paid for business-use properties.
- Do landlords need GST registration for commercial rentals?Yes, if annual rent exceeds ₹20 lakh, GST registration is mandatory.
- Is GST applicable on ready-to-move commercial properties?No, GST is not applicable if the Completion Certificate is issued before the sale.
