The short answer
The rent per square foot is the number everybody negotiates and the one that matters least over the life of a lease. Lock-in, escalation, the area the rent is charged on, CAM and the exit terms decide what the space really costs and how easily either side can walk away.
Everything below is negotiable between landlord and tenant. We describe how each clause works; we do not quote market norms, because they differ by city, building and the strength of each side.
Term and lock-in
The term is how long the lease runs, often with options to renew. The lock-in is the part of the term during which neither side (or only one side) may end the lease without paying for the remaining lock-in months.
Check whether the lock-in binds both parties or only the tenant, what is payable if you leave early (usually rent for the unexpired lock-in), and whether the landlord may end the lease early for a sale or redevelopment.
Illustrative example: on a nine-year lease with a three-year lock-in and rent of ₹1,00,000 a month, a tenant leaving after eighteen months could owe the remaining eighteen months of lock-in rent, ₹18,00,000, unless the lease says otherwise.
Escalation
Escalation raises the rent at set intervals, usually by a fixed percentage. The interval, the percentage and whether it compounds are all negotiable; write all three down.
Check whether the escalation also applies to CAM and parking charges, and whether it restarts on renewal.
Illustrative example: rent of ₹1,00,000 a month with a 15% increase every three years becomes ₹1,15,000 in year four and ₹1,32,250 in year seven, because the second increase is on the already-increased rent. A 5% increase every year on the same starting rent reaches about ₹1,27,628 in year six. Our rent escalation calculator runs your own numbers.
Security deposit and rent-free fit-out
The security deposit is usually expressed as a number of months' rent. Write down whether it earns interest, what may be deducted from it, and the number of days after handover within which it is refunded. Tie the refund to a joint inspection, not to the landlord's discretion.
A rent-free fit-out period lets the tenant build interiors before rent starts. Agree when it begins (on handover of the keys, not on signing), what happens if the landlord's own works or approvals delay it, and whether CAM and power are payable during it.
Illustrative example: if the deposit were six months' rent on ₹1,00,000 a month, ₹6,00,000 would sit with the landlord for the whole lease. That is working capital you cannot use, so it belongs in your cost comparison.
Area, CAM and other charges
1. Area: confirm whether rent is charged on carpet area or on chargeable (super built-up) area, and what loading the landlord has applied. Measure the carpet area once before signing.
2. CAM: who sets it, what it covers, how it is revised and whether you can see the accounts behind it.
3. Utilities: electricity at what tariff, air-conditioning hours included and the charge beyond them, power back-up.
4. Taxes: who pays property tax and any increase in it during the lease.
5. Parking: the number of bays included and the charge for more.
Illustrative example: a unit of 1,500 sq ft chargeable area with 1,000 sq ft of carpet has a loading of 50%. At ₹100 per sq ft a month on chargeable area, rent is ₹1,50,000 a month, which is ₹150 for every square foot you can actually use.
Repairs, use, subletting and signage
Repairs: a common split is structure, roof, external walls and building services to the landlord, and the interiors and the tenant's own fit-out to the tenant. Whatever you agree, list it; vague clauses lead to deposit disputes.
Permitted use: name the business you will run. If you change it, you may need the landlord's consent and fresh licences.
Subletting and assignment: tenants often want the right to share space with group companies or assign the lease on a business sale; landlords often want consent rights. Agree the test in advance.
Signage: where you may put signs, their size, and who obtains and pays for any municipal permission.
Exit and restoration
Notice: the notice period each side must give after the lock-in, and whether notice can be served during the lock-in to take effect when it ends.
Restoration: whether you must return the space to bare shell, to the condition at handover, or as it stands. Photograph and list the condition at handover, signed by both sides.
Holding over: the rent payable if you stay beyond the term while a renewal is negotiated.
Handover, fit-out and approvals
1. Before signing, walk the space with the landlord and list its condition: flooring, ceiling, walls, toilets, air-conditioning, fire sprinklers and alarms, electrical panels. Attach the list and photographs to the lease.
2. Agree which works the landlord completes before handover (for example, a bare shell with services brought to the door, or a warm shell with toilets and air-conditioning) and the date by which it does so.
3. Agree whether you need the landlord's approval for your fit-out drawings, how quickly it must respond, and who obtains any approvals the fit-out needs from the building or the authority.
4. Confirm that the building's occupancy certificate and, where the building needs one, its fire approval are in place and cover your use. Your insurer and your own auditors may ask for them.
5. Fix the rent commencement date in the lease as a date or as a number of days after handover, so it does not move with arguments about whether the space was ready.
Worked example: what the lease really costs
Illustrative numbers only, to show the method, not market rates. A tenant takes 2,000 sq ft of chargeable area at ₹80 per sq ft a month rent and ₹15 per sq ft CAM, with a deposit of six months' rent, three months rent-free for fit-out, a three-year lock-in and 15% escalation every three years on a nine-year term.
Monthly rent is ₹1,60,000 and CAM ₹30,000, so ₹1,90,000 a month in years one to three (CAM here is assumed not to escalate). The deposit is ₹9,60,000. The rent-free period saves ₹4,80,000 of rent at the start, but CAM may still be payable during it if the lease says so.
In years four to six rent becomes ₹1,84,000, and in years seven to nine ₹2,11,600. If the lease also escalates CAM, add that too. Comparing two offers on this whole-lease basis, rather than on the first month's rent, shows which is actually cheaper.
GST at 18% will usually apply to the rent and CAM, paid by the landlord on its invoice or by you under reverse charge depending on registrations; see the GST and TDS guide.
Stamp duty and registration
Under section 17(1)(d) of the Registration Act, 1908, a lease of immovable property from year to year, or for any term exceeding one year, must be registered; section 107 of the Transfer of Property Act, 1882 says the same such leases can be made only by a registered instrument. This is why many leases are written for eleven months. An unregistered lease that needed registration is weak evidence if there is a dispute.
Stamp duty on a lease is set by each state and usually depends on the rent, the deposit and the term. Check the state's current rate with its registration department; our stamp duty pages list the department for each state.
Documents, questions and common mistakes
Documents to collect before signing: the landlord's title document or ownership proof; the approved building plan and occupancy certificate; fire NOC where the building needs one; the latest property tax receipt; the CAM agreement and last year's CAM statement; an electricity bill showing sanctioned load and tariff; the landlord's PAN and, if registered, GSTIN; for a company landlord, the board resolution authorising the lease and naming the signatory; and the final lease with the condition list attached.
Questions: Is the rent on carpet or chargeable area, and what is the loading? Does the lock-in bind you as well as me? Does escalation apply to CAM? What is included in CAM and can I see last year's statement? Which repairs are yours? When does the fit-out period start? Is the building's occupancy certificate in place for my use? Will the lease be registered, and who pays the stamp duty?
Mistakes: signing on a term sheet and leaving the lease to later; agreeing a long lock-in without a matching landlord lock-in; accepting 'CAM as applicable' with no revision formula; starting fit-out before the lease is signed; not registering a lease that needs registration.
This is general information, not tax or legal advice; confirm how it applies to you with a chartered accountant (and a lawyer for the documents) before you sign or pay.
Common questions
Must a commercial lease be registered?
A lease from year to year or for any term exceeding one year must be registered (section 17(1)(d) of the Registration Act, 1908; section 107 of the Transfer of Property Act, 1882). Shorter leases may also be registered, and some states have their own rules, so check locally.
What is a lock-in period?
The part of the lease during which a party cannot end it without paying for the remaining lock-in months. Check whether it binds the landlord, the tenant or both.
How is rent escalation usually written?
As a fixed percentage at a fixed interval, for example every year or every three years. The percentage, the interval and whether it applies to CAM are all negotiable.
What is a rent-free fit-out period?
A period at the start of the lease, after handover, during which the tenant builds its interiors without paying rent. Agree when it starts and whether CAM is payable during it.
Is CAM part of the rent?
Usually not. CAM is a separate monthly charge for the building's shared services, often per square foot of chargeable area, and it can be revised. Write down how.
Who pays stamp duty on a commercial lease?
Whoever the lease says; it is commonly the tenant, but it is negotiable. The amount depends on the state's rate for leases.
Sources
- Registration Act, 1908: section 17(1)(d); Transfer of Property Act, 1882: section 107; checked 2 October 2026
- Stamp duty on leases: each state's stamp law and registration department
- Worked examples use illustrative round numbers, not market rates
Last checked 2026-10-02.