New GST Rate on Commercial Property Sales and Leasing
- Under-construction commercial property may attract 5% without ITC or an effective 12% with ITC, depending on the type of real estate project.
- Completed commercial property is generally not subject to GST after the Completion Certificate/first occupation conditions are met.
- Commercial rent or lease generally attracts 18% GST.
- In certain cases, commercial rent paid to an unregistered landlord is taxable under RCM.
- ITC on commercial property expenses depends on the transaction type and applicable GST rules.
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 Commercial Property in India
GST on under-construction commercial property depends on the type of real estate project. These rates were not changed from 22 September 2025.
New GST Rate Table
| Property Type | New GST Rate | Condition |
|---|---|---|
| Commercial property in an RREP | 5% | Without Input Tax Credit (ITC) |
| Commercial property in a REP other than an RREP | Effective 12% | With Input Tax Credit (ITC) allowed |
| Ready-to-move commercial property | GST not applicable | If the entire consideration is received after Completion Certificate (CC) or first occupation, whichever is earlier |
Property Type
New GST Rate
Condition
Property Type
New GST Rate
Condition
Property Type
New GST Rate
Condition
Old GST Rate for Commercial Property Sales
(Old GST Rates – Applicable Until 21st September)
| Property Type | New GST Rate | Condition |
|---|---|---|
| Commercial property in an RREP | 5% | Without Input Tax Credit (ITC) |
| Commercial property in a REP other than an RREP | Effective 12% | With Input Tax Credit (ITC) allowed |
| Ready-to-move commercial property | GST not applicable | If the entire consideration is received after Completion Certificate (CC) or first occupation, whichever is earlier |
Property Type
New GST Rate
Condition
Property Type
New GST Rate
Condition
Property Type
New GST Rate
Condition
Note: These GST rates were already applicable before 22 September 2025 and continued thereafter. There was no September 2025 GST rate change for these commercial property sales.
New GST on Commercial Property Leasing
| Type of Lease | New GST Rate |
|---|---|
| Office space, shops, warehouses | 18% |
| Long-term lease with upfront premium (general cases) | 18% |
| Commercial land lease (business use) | 18% |
Type of Lease
New GST Rate
Type of Lease
New GST Rate
Type of Lease
New GST Rate
Note: Upfront premium for a long-term lease of 30 years or more of specified industrial plots or plots for development of infrastructure for financial business may be exempt from GST when the prescribed conditions for the lessor, lessee and property are satisfied.
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Old GST on Commercial Property Leasing
| Type of Lease | Old GST Rate |
|---|---|
| Office space, shops, warehouses | 18% |
| Long-term lease with upfront premium (general cases) | 18% |
| Commercial land lease (business use) | 18% |
Type of Lease
Old GST Rate
Type of Lease
Old GST Rate
Type of Lease
Old GST Rate
Note: Even before 22 September 2025, upfront premium for certain qualifying long-term leases of 30 years or more of specified industrial plots or infrastructure-related plots could be exempt from GST, subject to prescribed conditions.
Input Tax Credit on Commercial Properties
- Construction-related services, subject to applicable ITC restrictions
- Monthly commercial rent paid with GST for business use
- Interior or fit-out expenses, where ITC is not restricted under GST rules
- Maintenance and repair charges, if taxed and otherwise eligible
Businesses registered under GST can claim eligible Input Tax Credit on commercial property-related expenses, subject to the restrictions under GST law.
GST Registration Requirement for Landlords
- Registration is generally required if aggregate turnover exceeds ₹20 lakh annually (₹10 lakh in specified states)
- Registered landlords generally charge and pay 18% GST on taxable commercial rent
- In specified cases where an unregistered landlord rents commercial property to a registered person, GST is payable by the recipient under RCM
- Issue proper tax invoices using the applicable SAC under 9972
- File applicable GST returns as per the prescribed filing frequency
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.
