Rohit runs a small software testing company from an office in Baner. Last year he took a 3BHK in Wakad so that trainees coming in from Nagpur and Nashik had somewhere to stay. The landlord, a retired bank officer, has no GST number and never will. Rent was fixed at ₹45,000 a month.
Six months later his accountant asked a question nobody had thought about. "Who's paying the GST on the Wakad flat?"
Rohit was. He just didn't know it yet.
That's the "18% GST on house rent" people search for. It doesn't touch ordinary families, and the landlord doesn't collect it. It lands on tenants who hold a GST registration. If you want the full picture, commercial rent included, our main GST on rent guide has it. This page stays with the house-and-flat case and goes deeper.
Who actually pays 18% GST on a house or flat?
Renting a residential dwelling for use as a residence is exempt, with one exception written into the exemption entry: it stops being exempt when the flat is rented to a registered person. From 18 July 2022 that rent is taxed at 18%, and the tax is paid by the tenant under reverse charge (RCM).
The RCM entry names the supplier as "any person" and the recipient as "any registered person". Read that twice. It means the landlord's own status doesn't matter here. This is where most people get confused: even a landlord who has a GSTIN for some other business doesn't add GST to a flat's rent bill. The registered tenant pays it to the government directly.
| Who rents the flat | Used as | GST on rent |
|---|---|---|
| Salaried person or family, no GST registration | Home | Exempt |
| Company, LLP or firm with GST registration | Staff or trainee housing, guest house | 18%, paid by tenant under RCM |
| Registered proprietor, lease in own name, lives there | Own home | Exempt (from 1 January 2023) |
| Registered proprietor, flat taken for the business | Business use | 18%, paid by tenant under RCM |
The proprietor exception, and where freelancers fit
For about five months after July 2022, a sole proprietor with a GST number looked liable to pay RCM on the flat he lived in with his family. That made little sense, and from 1 January 2023 the exemption was clarified. It now covers a registered person who is the proprietor of a proprietorship concern, rents the flat in a personal capacity to use as their own residence, and does so on their own account and not that of the proprietorship.
Take Neha, a UX designer in Kothrud with a GST registration because her clients are in Bengaluru and abroad. Her 2BHK is rented in her own name for ₹30,000 a month. She lives there. One bedroom doubles as her studio.
As long as the lease is hers personally and the rent is a household cost, she falls inside the exception. If she signs the lease in her business name, or treats the whole rent as a business expense in her books, she's moving the flat onto the proprietorship's account, and that is the case the exception leaves out. Many CAs read "own account" exactly this way. It's worth settling with yours before you file.
One more limit. The exception is written for proprietors. A partnership firm, an LLP or a private limited company renting a flat doesn't get it, even if a partner or director is the one living there.
Staff housing and guest flats
This is the most common real case in Pune. Companies in Hinjewadi and Kharadi take flats for interns or for staff on a long project. The flat is a home, but the tenant is a registered business, so RCM applies at 18%.
The label on the agreement doesn't change this. A leave and licence agreement for a flat taken by a registered company is caught the same way.
How the tenant pays RCM, step by step
Since your landlord won't raise a tax invoice for GST, you document the tax yourself. If the landlord is unregistered, the law asks you to issue a self-invoice for what you received. Then:
- Work out 18% on the month's rent: 9% CGST and 9% SGST within Maharashtra.
- Report it as reverse-charge tax in your GSTR-3B for that period.
- Pay it from your electronic cash ledger.
- Claim the same amount as input tax credit, if the flat is used for your business.
Step three surprises people. You can't use credit already sitting in your ledger to pay RCM, because the law lets credit be used only for "output tax", and output tax is defined to exclude tax payable on reverse charge. So actual cash goes out every month, even if you're holding lakhs in credit.
The credit you claim in step four then helps with your output tax in later months. For most regular-scheme businesses the net cost ends up close to nil. The cash flow still hurts a little.
When can you claim the credit back?
A regular-scheme business can usually claim the RCM paid on a flat used for its business, such as a guest house for visiting staff or housing for a project team. The tax paid on reverse charge counts as an input like any other.
Watch the edges, though. Credit is blocked on goods or services used for personal consumption. If a flat is in practice a perk for one director's family, expect that question to come up. And a composition dealer can't claim input tax credit at all, so for them RCM on a flat is a pure cost.
Pune example: the Wakad flat in numbers
Back to Rohit. His company is registered in Maharashtra, the flat is in Wakad, and the rent is ₹45,000 a month.
He still pays the landlord ₹45,000, nothing more. Separately, his company deposits ₹8,100 in cash with its monthly return and claims ₹8,100 as credit in that same return. Over a year that's ₹97,200 paid as tax and, because the flat houses trainees for the business, claimed back as credit.
The six months he missed? He owed ₹48,600 for that period, plus interest for paying late. He paid it with the next return. Catching it sooner would have saved him the interest.
Checking your own numbers? The calculator above is already set to 18%.
Deposit and society charges on a rented flat
A refundable security deposit isn't treated as payment for the rent unless the landlord actually applies it towards rent. So no RCM when you hand over ₹2 lakh at the start. If two months' rent is adjusted from it when you leave, that adjusted part is rent, and RCM follows it.
Society maintenance is a separate supply by the housing society to its members, with its own threshold. It isn't part of this RCM calculation.
Frequently Asked Questions
Is there 18% GST on house rent for a salaried tenant?
Does my landlord charge 18% GST on a flat if he has a GST number?
I'm a registered freelancer living in a rented flat. Do I pay RCM?
Can a company claim ITC on GST paid for staff flats?
Can I pay RCM on rent from my existing input tax credit?
Related: GST on rent (main guide) · GST on commercial property rent · किराये पर GST (हिंदी) · Reverse GST calculator · CGST SGST calculator
General information, not tax advice. Names and amounts in the examples are made up. Sources: Notification 12/2017-CT(R) S. No. 12 as amended by 04/2022-CT(R) and 15/2022-CT(R); Notification 13/2017-CT(R) S. No. 5AA, inserted by 05/2022-CT(R) w.e.f. 18 July 2022; CGST Act sections 2(31), 2(82), 10, 17(5)(g), 31(3)(f) and 49(4).
Last reviewed 8 November 2026.