GST on Rent and Real Estate: What Landlords, Tenants and Home Buyers Should Know
GST on property is often misunderstood. Not all rent is taxable, a flat sale isn’t always taxable, and since 2022–24 a set of reverse charge rules has shifted the tax onto registered tenants in some cases. Here is the position as of 2026.
1. Residential rent
| Situation | GST |
|---|---|
| Residential dwelling rented to an individual for living (unregistered tenant) | Exempt |
| Residential dwelling rented to a registered person (e.g. a company taking a flat for employees) | 18% under reverse charge: the tenant pays (since 18 July 2022) |
| Rented to a registered proprietor in their personal capacity, for their own residence | Exempt |
| Residential property used as a guest house, hotel or PG (commercial use) | Generally taxable, as accommodation services |
2. Commercial rent (shops, offices, warehouses)
| Landlord | Tenant | Who pays GST at 18% |
|---|---|---|
| Registered landlord | Anyone | Landlord charges GST on the invoice (forward charge) |
| Unregistered landlord | Registered tenant | Tenant pays under reverse charge (from 10 October 2024) |
| Unregistered landlord | Composition taxpayer tenant | Excluded from this reverse charge, from 16 January 2025 |
| Unregistered landlord | Unregistered tenant | No GST |
Landlord registration: a landlord earning commercial rent must register once aggregate turnover (rent plus other taxable supplies) crosses ₹20 lakh in a year. Exempt residential rent counts in aggregate turnover but is not taxed.
Tenants paying under reverse charge pay in cash through GSTR-3B. They can generally claim it back as ITC in the same return if the premises are used for taxable business, so it is often cash-flow neutral.
Security deposits: a refundable deposit is not consideration and attracts no GST. A deposit adjusted against rent becomes taxable when adjusted.
3. Buying an under-construction flat
| Type | GST rate | ITC to builder |
|---|---|---|
| Affordable housing (carpet area up to 60 sq m in metros / 90 sq m elsewhere, value up to ₹45 lakh) | 1% (effective) | Not available |
| Other residential apartments | 5% (effective) | Not available |
| Commercial units in a residential real estate project | 5% | Not available |
The effective rate is applied after a deemed one-third deduction for land value, so GST is calculated on the total price. Mumbai Metropolitan Region counts as a metro for this test. The GST 2.0 rate changes from 22 September 2025 did not change these real-estate rates.
4. Ready-to-move property
GST does not apply to the sale of:
- a completed flat or building after the completion certificate (or first occupation)
- land
- a resale flat between individuals
Only stamp duty and registration apply.
5. Other real estate charges
| Charge | GST |
|---|---|
| Society maintenance | Exempt up to ₹7,500 per member per month. Above that, 18% on the whole amount (if the society’s turnover exceeds ₹20 lakh) |
| Preferential location charges, parking (sold with an under-construction flat) | Part of the flat price, at the same rate |
| Brokerage | 18% |
| Lease premium / long-term lease of industrial plots | Specific exemptions for some government lessors. Otherwise taxable |
Practical tips
- Companies renting flats for staff: set up the reverse charge entry in your books and GSTR-3B, and claim ITC where eligible. Accommodation used for personal consumption of employees may be blocked.
- Registered tenants of unregistered landlords: create a self-invoice and pay the GST under RCM monthly.
- Landlords with several commercial properties: track turnover to know when you cross ₹20 lakh.
- Home buyers: check that the builder’s invoice shows the correct rate (1% or 5%) and does not charge GST after the completion certificate.
Frequently asked questions
I rent my flat to a company for its director’s stay. Who pays GST?
If the company is registered, it pays 18% under reverse charge. You (an individual landlord) don’t charge GST, and the rent remains exempt in your hands.
Is GST payable on rent for a shop I let to a small trader?
If you are unregistered and the trader is unregistered, no GST. If you are registered, you must charge 18%. If the trader is registered (but not under composition) and you are unregistered, the trader pays under reverse charge.
Is GST payable on a resale flat?
No. GST applies only to under-construction properties sold by a builder.
Renting property or buying from a builder? Garvita Jain & Co. checks GST on your lease and purchase agreements, sets up reverse charge compliance for tenants, and registers landlords who cross the threshold. Contact us here, or at contact@garvitajainandco.com or +91 98678 16597.
This article is general information based on the law as of November 2026 and is not professional advice.
Sources
Official
- CBIC GST, Notification 12/2017-CT(R) (exemptions, including residential dwelling) and 13/2017-CT(R) (reverse charge, entries 5AA and 5AB) as amended
- CBIC GST, Circular 245/02/2025-GST (RCM on commercial rent and composition taxpayers)
- GST Council, Press releases on the 54th and 55th meetings
Professional / CA publications
- TaxGuru, Reverse charge on commercial property rent from unregistered persons
- ClearTax, RCM on rent of commercial property under GST
- TaxGuru, GST on rent of residential and commercial property
- Studycafe, RCM on commercial rent: composition taxpayer exemption (Circular)