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Renting property is common across residential and commercial sectors in India. But when does GST apply to rent? Is there GST on house rent or only for commercial use? In this blog, we’ll break down the rent gst rate, when GST applies, and how it affects both landlords and tenants.
Under GST law, renting out property is considered a supply of service, which can attract GST — but not always.
GST only applies to:
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The gst rate on rent for taxable rentals is 18%. This applies to:
If the rent is collected from a GST-registered business or company, and the property is used for commercial purposes, GST is applicable.
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Here’s the important distinction:
| Type of Rental | GST Applicable? | GST Rate |
|---|---|---|
| Residential property for personal use | No | Nil |
| Residential property used for business | Yes | 18% |
| Commercial property for any use | Yes | 18% |
So, gst on house rent is not applicable when it is used solely for residential purposes.
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If the total annual rental income exceeds ₹20 lakh (₹10 lakh in some states), the landlord is required to:
If a GST-registered business rents a property from an unregistered landlord, then GST is payable by the tenant under the Reverse Charge Mechanism.
The tenant pays the tax directly to the government. This applies mainly to commercial rent situations, not personal rentals.
Tenants (usually businesses) who pay GST on rent can claim Input Tax Credit, provided:
This helps reduce the overall GST burden for businesses.
BUSY is a simple, yet powerful GST / VAT compliant Business Accounting Software that has everything you need to grow your business.