New GST on Rent: When and Where It Applies
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.
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New GST Rate on House Rent in India
The Government of India is updating GST rates effective after 22 Sep 2025. Below are the expected new GST treatments for renting of residential and commercial property (no compensation cess).
New GST on House Rent
Here’s the important distinction:
| Type of Rental | GST Applicable? | New GST Rate |
|---|---|---|
| Residential property for personal use | No | Nil |
| Residential property used for business (tenant is GST-registered) | Yes (RCM) | 18% |
| Commercial property for any use | Yes | 18% |
Notes: Residential letting to individuals for personal use remains exempt. When a GST-registered business takes a residential dwelling on rent, tax applies under RCM at 18%. Commercial property rentals continue at 18% under forward charge.
Is Rent Taxable Under GST?
Under GST law , renting out property is considered a supply of service, which can attract GST — but not always.
GST only applies to:
- Commercial properties rented for business or official use
- Residential properties rented for commercial purposes
- Properties rented to registered businesses
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Old GST Rate on Rent
The gst rate on rent for taxable rentals is 18%. This applies to:
- Office spaces
- Shops
- Warehouses
- Residential units used as offices
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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Old GST on House Rent
(Old GST Rates – Applicable Until 21st September)
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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When Does a Landlord Need to Register for GST?
If the total annual rental income exceeds ₹20 lakh (₹10 lakh in some states), the landlord is required to:
- Register under GST
- Charge 18% GST on rent (where applicable)
- Issue tax invoices
- File GST returns regularly
Reverse Charge Mechanism (RCM) on Rent
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.
Input Tax Credit on Rent
Tenants (usually businesses) who pay GST on rent can claim Input Tax Credit , provided:
- They are registered under GST
- The rented premises are used for business
- The GST invoice is correctly issued
This helps reduce the overall GST burden for businesses.
