--- title: "New GST on Commercial Rent 2026: 18% Rate on Office Rent, Shop" description: "New GST rate on commercial rent in 2026 is 18% on office, shop and warehouse rent. Apply the correct GST rate automatically with Busy on every invoice." canonical: "https://busy.in/gst-rates/commercial-rent/" author: "Hitesh Aggarwal" published: "2025-05-15T07:17:55.000Z" category: "GST Rates" --- - Commercial rent in India is subject to an 18% GST rate for offices, shops, warehouses, and co-working spaces. - Renting to SEZ units is zero-rated under certain conditions, or 18% IGST with a refund option. - Landlords with annual income over ₹20 lakh must register for GST and collect it on commercial rent. - Tenants renting from unregistered landlords must pay GST under the Reverse Charge Mechanism. - GST-registered tenants can claim Input Tax Credit on the GST paid for business-use rental properties. # New GST on Commercial Rent: Applicability and Compliance Renting out commercial spaces like offices, shops, and warehouses is a common business activity in India. But did you know that such rental income is taxable under GST? This blog explains everything you need to know about the gst on commercial rent, in a simple and clear manner. ## **GST on Rent in India** Commercial property renting and leasing services fall under **SAC Code 997212** in the GST framework. Businesses that rent offices, shops, warehouses, or workspaces are generally required to charge **18% GST** on the rental amount, provided the landlord is registered under GST. Even under the updated GST structure effective **after 22 September 2025**, the **GST rate on commercial renting remains unchanged at 18%**. The table below shows both the **old and new rates** for clarity. ## New GST Rate on Commercial Renting Services | Type of Rental Service | SAC Code | New GST Rate (After 22 Sep) | Old GST Rate (Before 22 Sep) | ITC / Notes | | --- | --- | --- | --- | --- | | Renting or leasing of non-residential property (offices, shops, showrooms) | 997212 | 18% | 18% | Input Tax Credit generally available to the tenant if used for business | | Warehouses, godowns, and cold storage used for commercial purposes | 997212 | 18% | 18% | ITC available; applies to both basic and fully fitted spaces | | Co-working spaces and business centres (workspace licensing) | 997212 | 18% | 18% | Covers shared office seats or licensed workspaces | | Renting to SEZ units or developers for authorised operations | 997212 | 0% (zero-rated) / 18% IGST with refund | 0% (zero-rated) / 18% IGST with refund | Zero-rated supply under LUT or refund mechanism | | Landlord not registered under GST (below threshold) | — | Not applicable | Not applicable | GST is not charged if the landlord is not required to register | ## Charge Mechanism (Forward vs RCM) | Lessor (Who rents out) | Lessee (Who takes on rent) | New GST Rate | Charge Type | | --- | --- | --- | --- | | Private owner/landlord (registered) | Any business | 18% | Forward charge (landlord collects GST) | | Central/State Govt. or Local Authority | Registered business entity | 18% | RCM (tenant pays under reverse charge) | | Government bodies | Unregistered individual (non-business) | 0% | Exempt / outside GST | ## **Is GST Applicable on Commercial Rent?** Yes, under GST law, renting commercial property is treated as a taxable supply of service. If you’re renting out office space, a shop, or a warehouse, GST is applicable at 18% on the rent received. - Office spaces - Shops - Godowns and warehouses - Commercial complexes Even if the building is residential in nature but rented out for business purposes, GST applies. Get a Free Trial – [Best Accounting Software For Small Business](https://busy.in/accounting-software/) Live Demo Available Today ## Send Credit Notes for Rent Adjustments to Tenants Instantly Trusted by 6,00,000+ Users 4.6 Google Rating \* No credit card required ## **What is the GST Registration Requirement for Landlords?** If your total annual income (including rent and other services) exceeds ₹20 lakh (₹10 lakh in special category states), you must register under GST. After registration, landlords must charge and collect **GST on rent paid for commercial property**. - Full-time landlords - Property owners renting part-time - Businesses or individuals letting out commercial property ## **What is the Reverse Charge Mechanism?** If a registered tenant rents commercial property from an unregistered landlord, the tenant must pay GST under the **Reverse Charge Mechanism (RCM)**. - The tenant pays 18% GST directly to the government. - The tenant can claim Input Tax Credit (if eligible). - The landlord does not collect or file GST. This rule ensures GST collection even when the landlord isn’t GST-registered. **Explore a Free Demo of –** [**Best Inventory Management Software For Small Business**](https://busy.in/accounting-software/inventory-management/) ## **How to Calculate GST on Commercial Rent** It’s simple: apply 18% GST on the agreed rent amount. - Monthly rent: ₹50,000 - GST @18%: ₹9,000 - Total payable: ₹59,000 The tenant pays GST in addition to the rent charged. **Get a Free Demo of –** [**Real Estate Accounting & Billing Software**](https://busy.in/accounting-software/real-estate/) ## **GST Compliance for Landlords** - Register under GST if your turnover crosses the threshold. - Issue GST-compliant invoices with tax details. - Collect and deposit GST before due dates. - File monthly GST returns like GSTR-1 and [**GSTR-3B**](https://busy.in/gst/a-guide-to-gstr-3b-what-is-gstr-3b/) . - Maintain records of rent agreements, payment receipts, and invoices. ## **Input Tax Credit for Tenants** Tenants who are GST-registered and use the property for business purposes can claim Input Tax Credit on the GST paid on rent. This reduces their overall tax burden and supports better cash flow. ## **Conclusion** The **gst on commercial rent** is straightforward: If you’re renting property for business use and meet the turnover threshold, 18% GST applies. Whether it’s gst commercial property rent or gst on shop rent, staying compliant with GST rules is essential to avoid penalties and ensure smooth business operations. ## About the author **Hitesh Aggarwal** 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 ### Is GST charged on renting a shop or showroom? Yes. GST on shop rent is 18%, applicable when rented for commercial use. ### What if the landlord is not registered under GST? If the tenant is registered and the landlord is not, GST is paid under Reverse Charge Mechanism (RCM) by the tenant. ### Is GST applicable on a residential property rented as an office? Yes, if a residential unit is used for commercial purposes, GST at 18% applies on the rent. ### Can the landlord claim Input Tax Credit? Yes, if registered and using taxable inputs (like repairs or property maintenance), landlords can claim Input Tax Credit (ITC). ### What if the rent is below ₹20 lakh per year? If the landlord's total annual income is below ₹20 lakh, they're not required to register for GST. 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