Renting out property is one of the most common sources of business income in India — and one where the GST treatment genuinely confuses people, because it depends on what kind of property is rented and who the tenant is. This guide explains how to raise a correct rent invoice.
When does GST apply to rent?
The renting of immovable property is a supply of service under GST, classified under SAC 9972. Broadly:
- Commercial property (shops, offices, warehouses, factories) rented out for business use attracts GST — generally at 18% — payable by the landlord if the landlord is registered.
- Residential property let out for use as a residence is exempt from GST.
- Residential property rented to a GST-registered person can attract GST under the reverse charge mechanism (RCM), where the registered tenant pays the tax.
Do you need to register?
A landlord must obtain GST registration once total taxable rental (plus any other taxable income) crosses the ₹20 lakh services threshold (₹10 lakh in special-category states). Rent from purely exempt residential letting does not count towards taxable turnover, but commercial rent does. If you are below the threshold and let out only exempt residential property, you generally need neither registration nor a GST invoice.
What a rent invoice must contain
A GST-compliant rent invoice for commercial property should include:
- Landlord’s name, address and GSTIN
- Tenant’s name, address and GSTIN (if registered)
- A unique invoice number and the date
- The property address and the rental period (e.g. “Rent for July 2026”)
- SAC code 9972
- Taxable value (the monthly rent)
- GST breakup — CGST + SGST for intra-state, or IGST for inter-state
- Total amount payable
GST and TDS are two different things
This is the single biggest point of confusion for landlords and tenants. They are separate obligations:
| GST on rent | TDS on rent | |
|---|---|---|
| Law | GST Act | Income-tax Act, Section 194-I |
| Who acts | Landlord charges it | Tenant deducts it |
| Direction | Added to the rent | Withheld from the rent |
| Deposited against | Landlord’s GSTIN | Landlord’s PAN |
GST is generally computed on the rent amount excluding TDS. The tenant pays the landlord the rent plus GST, minus TDS, and separately deposits the TDS with the income-tax department.
A worked example
Suppose commercial rent is ₹1,00,000 per month and the landlord is registered:
- Rent (taxable value): ₹1,00,000
- GST @ 18% (9% CGST + 9% SGST): ₹18,000
- Invoice total: ₹1,18,000
- TDS @ 10% under 194-I on ₹1,00,000: ₹10,000 (deducted by tenant)
- Net paid to landlord: ₹1,18,000 − ₹10,000 = ₹1,08,000
The landlord accounts for the full ₹18,000 GST, and claims credit for the ₹10,000 TDS when filing income-tax returns.
Intra-state vs inter-state
For immovable property, the place of supply is the location of the property. If the property and the landlord’s registration are in the same state, charge CGST + SGST; if the landlord is registered in a different state from where the property is located, IGST applies. Get this right — an incorrect tax type can cause the tenant’s ITC to be rejected.
The bottom line
For commercial rent, a registered landlord raises a monthly tax invoice under SAC 9972 with 18% GST and the correct CGST/SGST or IGST split. Residential letting for residence is exempt, but residential rent to a registered tenant can trigger reverse charge. Keep GST and TDS mentally separate — one is charged by you, the other is withheld by the tenant.
Need a ready format? Download a free GST invoice template in Excel, Word or PDF and adapt it for rent, or generate one instantly with the RaiseBill Bill Maker.