GST and TDS on commercial rent

The short answer

GST: renting commercial property is a taxable service at 18%. Who pays it to the government depends on whether the landlord is registered for GST and, if not, on the tenant's registration.

TDS: the tenant (where the Act requires it to deduct) deducts 10% of rent for land or buildings when the rent exceeds ₹50,000 for a month or part of a month, under section 393(1) of the Income-tax Act, 2025 (section 194-I of the 1961 Act before 1 April 2026).

The two are separate. GST is a tax on the renting service; TDS is an advance collection of the landlord's income tax. A single rent payment can involve both.

GST: when the landlord must register

A landlord must register for GST once their aggregate turnover crosses the threshold for service providers: ₹20 lakh in most states (the threshold is lower in a few special category states). Aggregate turnover counts all of the person's taxable supplies, not just one property.

A registered landlord charges 18% GST on the rent on its invoice (forward charge), collects it from the tenant and pays it to the government.

Illustrative example: on rent of ₹1,00,000 a month, a registered landlord invoices ₹1,00,000 plus ₹18,000 GST, a total of ₹1,18,000.

Reverse charge: unregistered landlord, registered tenant

From 10 October 2024, when a landlord who is not registered for GST rents commercial property to a tenant who is registered, the tenant pays the 18% GST to the government under reverse charge (Notification 09/2024-Central Tax (Rate)). The landlord does not charge GST on its invoice.

From 16 January 2025, tenants registered under the composition scheme are excluded from this reverse charge (Notification 07/2025-Central Tax (Rate)).

Illustrative example: a GST-registered tenant (not under composition) pays an unregistered landlord ₹1,00,000 rent for a shop. The landlord's invoice shows ₹1,00,000. The tenant separately pays ₹18,000 GST to the government under reverse charge in its own return. Whether the tenant can then claim that ₹18,000 back as input tax credit depends on its own GST position; ask your chartered accountant.

Residential property let for business

Renting a residential dwelling to a GST-registered person has its own rules, which depend on how the dwelling is used and who the parties are. These are not covered here: check with a chartered accountant before signing such a lease.

TDS on rent: section 393(1) of the Income-tax Act, 2025

The Income-tax Act, 2025 has applied from 1 April 2026. Under it, TDS on rent is section 393(1); before that date it was section 194-I of the Income-tax Act, 1961.

The rate for rent of land or buildings (including furniture and fittings let with them) is 10%. The deduction applies where the rent exceeds ₹50,000 for a month or part of a month, a threshold set by the Finance Act, 2025.

Who must deduct depends on who the tenant is; the Act sets this out, and individual tenants should check with a chartered accountant whether and how the deduction applies to them.

Illustrative example: a tenant required to deduct pays rent of ₹75,000 for a month. It deducts ₹7,500 (10%), pays ₹67,500 to the landlord and deposits ₹7,500 with the government against the landlord's PAN. The landlord claims credit for the ₹7,500 against its income tax.

Illustrative example below the threshold: rent of ₹45,000 a month does not exceed ₹50,000 for the month, so the 10% deduction described here does not apply to it.

Putting GST and TDS together

Illustrative example: rent of ₹1,00,000 a month from a GST-registered landlord to a tenant that must deduct TDS. GST at 18% is ₹18,000 and the invoice is ₹1,18,000. TDS at 10% on the rent of ₹1,00,000 is ₹10,000. Whether TDS is worked out on the rent alone or including GST is a point to confirm with your chartered accountant before the first payment.

Keep the two in separate columns of your rent ledger: GST belongs to the GST return, TDS to the TDS statement and the landlord's tax credit.

Worked example: a year of rent payments

Illustrative numbers only. A GST-registered landlord lets an office at ₹75,000 a month to a company tenant required to deduct TDS on rent.

Each month the landlord invoices ₹75,000 rent plus ₹13,500 GST (18%), a total of ₹88,500. The tenant deducts TDS of ₹7,500 (10% of the ₹75,000 rent, because the rent exceeds ₹50,000 for the month) and pays the landlord the balance. Over twelve months the landlord collects ₹1,62,000 of GST to pay to the government and the tenant deposits ₹90,000 of TDS against the landlord's PAN.

If the same landlord were unregistered and the tenant GST-registered (not under composition), the invoice would show ₹75,000 with no GST, and the tenant would pay the ₹13,500 a month (₹1,62,000 a year) to the government itself under reverse charge. The TDS would be the same.

Whether TDS is worked out on the rent alone or on the rent plus GST is a point to settle with your chartered accountant before the first payment; this example uses the rent alone.

Checklist for landlords

1. Work out your aggregate turnover across all your taxable supplies to see whether you must register for GST.

2. If registered, invoice 18% GST on commercial rent and file returns on time.

3. If not registered and your tenant is GST-registered, tell the tenant in writing so it can pay under reverse charge; ask whether it is under the composition scheme.

4. Give your PAN to every tenant that deducts TDS, and check that the deductions appear against your PAN in your tax statement.

5. Write the GST and TDS treatment into the lease so the rent figure is unambiguous.

Checklist for tenants

1. Ask the landlord, in writing, whether it is registered for GST and for its GSTIN if so.

2. If the landlord is unregistered and you are GST-registered (and not under composition), pay GST on the rent under reverse charge.

3. Check whether you are required to deduct TDS on rent and, if so, deduct 10% where the rent exceeds ₹50,000 for the month, deposit it and give the landlord the certificate.

4. Record the landlord's PAN before the first payment.

5. Make the lease say whether the rent is inclusive or exclusive of GST.

Records to keep and common mistakes

Records for landlords: the lease; rent invoices; GST returns where registered; the tenant's TDS certificates; and a reconciliation of TDS shown against your PAN with the rent received.

Records for tenants: the lease; the landlord's invoices and its GSTIN or written confirmation that it is unregistered; your reverse charge entries where they apply; TDS challans and the certificates issued to the landlord.

Keep both sides' copies for as long as the tax law requires records to be kept, and longer if the lease is in dispute.

Mistakes: treating GST and TDS as alternatives; they are separate taxes and both can apply. Assuming an unregistered landlord means no GST; for a registered tenant, the GST moves to the tenant under reverse charge. Using the old section number on a deduction made on or after 1 April 2026. Leaving the lease silent on whether rent includes GST.

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

Sources

• Notification 09/2024-Central Tax (Rate): reverse charge on renting of commercial property by an unregistered person to a registered person, from 10 October 2024; checked 2 October 2026
• Notification 07/2025-Central Tax (Rate): composition taxpayers excluded from that reverse charge, from 16 January 2025; checked 2 October 2026
• GST rate on renting of commercial property: 18%; registration threshold for services ₹20 lakh in most states; checked 2 October 2026
• Income-tax Act, 2025, section 393(1) (TDS on rent; earlier section 194-I of the Income-tax Act, 1961), threshold of ₹50,000 for a month or part of a month as set by the Finance Act, 2025; checked 2 October 2026

Last checked 2026-10-02.