A lease transfers a right to enjoy property for a term in return for rent, and the tenant gets an interest in the property. A licence is only permission to do something on the property that would otherwise be trespass, with no interest transferred. What the document is called matters less than what it actually grants.
Side by side
Factor
Lease
Licence
Law
Transfer of Property Act, section 105
Indian Easements Act, section 52
Interest in property
Yes
No
Exclusive possession
Usually
Usually not
Transferable
Generally, unless the lease forbids it
No; personal to the licensee
Ends on the owner's death or sale
No; binds the new owner
Generally revocable; does not bind a buyer
Registration
Compulsory for terms over one year
Not generally; Maharashtra requires it for leave and licence
Examples
Home rentals, shop and office leases
Paying guest rooms, co-working seats, kiosks
When Lease matters
A lease suits a tenant who wants security of occupation for a term, such as a shop or office fitting out at their own cost.
When Licence matters
A licence suits short, flexible or shared use, such as a PG room or a co-working seat.
In more detail
Courts look at substance over labels. Where someone has exclusive possession for a term at a rent, a document called a licence may be treated as a lease.
For commercial space, the lock-in, notice, escalation and fit-out clauses matter as much as the label; see the commercial lease guide.
Usually a licence: the occupant shares the premises and gets permission to use a room or bed, not exclusive possession of the property.
Does a lease survive a sale of the property?
Yes. A buyer takes the property subject to an existing valid lease.
Can a licence be revoked at any time?
Generally, subject to the terms of the agreement and the notice it requires. Some licences are irrevocable by law, for example where the licensee has built on the land acting on it.
Sources
Transfer of Property Act, 1882, sections 105 and 107
Indian Easements Act, 1882, sections 52–64
A plain-language summary, not legal or tax advice. Rules set by states differ and change; check the current position for your property.