GST on Commercial Property Rent: Who Pays the 18%

"My landlord isn't registered, so there's no GST on my shop rent."

Until October 2024 that was true for most small tenants. It isn't any more, and a lot of traders across Pune are still filing returns as if nothing changed. If you hold a GST registration on the regular scheme and rent a shop or a godown from someone who isn't registered, the 18% now sits with you.

This page covers the commercial side in detail. For flats and the full rent picture, see the main GST on rent guide.

GST on rent paid on commercial property: the rate

Renting out non-residential property is a taxable service at 18%. Inside Maharashtra that shows up as 9% CGST and 9% SGST. If the property and the landlord's registration are in one state and you're billed from another, you may see IGST instead. The total stays at 18%.

The September 2025 rate changes left this rate alone. Over the last two years, the rules on who pays have moved twice.

Who pays: four landlord and tenant combinations

The first row is the old normal. A registered landlord adds 18% to the bill, collects it and pays it. You check that his GSTIN is on the invoice, and if you're on the regular scheme, you claim the credit.

The second row is the new one. The GST Council recommended it at its 54th meeting, and it took effect on 10 October 2024 through Notification 09/2024. The entry covers renting of any property other than a residential dwelling, from any unregistered person to any registered person.

Composition dealers are out of it

When the rule first came in, it caught composition dealers too. That was painful: a composition dealer can't claim input tax credit, so the RCM was a straight extra cost on top of rent.

The 55th Council meeting fixed this. From 16 January 2025, Notification 07/2025 changed the recipient column to "any registered person other than a person who has opted to pay tax under composition levy". CBIC then regularised the gap between 10 October 2024 and 15 January 2025 on an "as is where is" basis in Circular 245/02/2025. In plain terms: if a composition dealer paid RCM during those three months, it stays paid, and if one didn't, nobody comes asking.

The ₹20 lakh limit: when must a landlord register?

A landlord has to register once aggregate turnover in a financial year crosses ₹20 lakh. In special category states the figure is ₹10 lakh. Maharashtra is on the ₹20 lakh limit.

Here's the part people miss. Aggregate turnover counts exempt supplies too. So if the same landlord also lets out flats to families, that exempt rent is added in when checking the ₹20 lakh line, even though no GST is charged on it.

Say a landlord owns a shop on FC Road let at ₹1,10,000 a month. That's ₹13.2 lakh a year, under the limit. Add a flat in Model Colony let to a family at ₹50,000 a month, another ₹6 lakh. Total ₹19.2 lakh. Still under, just. One rent increase and he's over, at which point he registers and starts adding 18% to the shop rent. The flat stays exempt.

For the tenant, the switch changes the paperwork more than the cost. Before, you paid RCM yourself. After, the GST is on the landlord's invoice and you claim credit from that.

What about the deposit and the electricity bill?

A security deposit isn't treated as payment for the supply unless the landlord applies it as consideration. So a refundable deposit of ₹3 lakh on a shop carries no GST when you pay it. If the landlord later keeps part of it towards unpaid rent, that part is rent and gets taxed.

Maintenance charges billed by the landlord along with the rent are part of the same supply and go at 18%.

Electricity takes a bit more care. CBIC's Circular 206/18/2023 says that when electricity is supplied bundled with the renting, it's part of a composite supply taxed at the rent's rate, even if it's billed on a separate line. But where the owner recovers electricity as a pure agent, charging you exactly what the DISCOM charged, it stays out of the taxable value. So if your landlord passes on the MSEDCL bill at actual cost, no GST on that amount. If he charges a flat ₹15 a unit while paying less, expect 18% on all of it.

Claiming credit as a tenant

On the regular scheme, GST on business premises is usually claimable. With a registered landlord you need his tax invoice showing his GSTIN and the tax. With RCM, you pay the tax in cash and claim it in the same return.

Two cautions. You can't pay the RCM out of your existing credit balance, because credit can be used only for output tax and output tax excludes reverse charge. And if you're a composition dealer, there's no credit at all, which is exactly why the composition exclusion matters.

Pune example: a godown in Bhosari

Imran runs an auto parts distribution business, registered on the regular scheme. He rents a 2,500 sq ft godown in the Bhosari industrial belt from a retired owner who has no GST registration. Rent is ₹60,000 a month.

He pays the owner ₹60,000, as before. He issues a self-invoice for the month, reports ₹10,800 as reverse-charge tax in his GSTR-3B, pays it in cash, and claims ₹10,800 as credit in the same return. Over a year that's ₹1,29,600 moving through his cash ledger.

Now suppose the owner had registered. The bill would read ₹60,000 plus ₹10,800 GST, total ₹70,800. Imran's credit is the same; the only difference is who deposits the tax.

If Imran had been a composition dealer, the answer would be simpler. From 16 January 2025 he'd owe no RCM on this godown.

Want to try it with your own rent? The calculator at the top of the page is already set to 18%.

Related: GST on rent (main guide) · 18% GST on house rent · किराये पर GST (हिंदी) · GST exclusive calculator · CGST SGST calculator

General information, not tax advice. Names and amounts in the examples are made up. Sources: Notification 13/2017-CT(R) S. No. 5AB, inserted by 09/2024-CT(R) w.e.f. 10 October 2024 and amended by 07/2025-CT(R) dated 16 January 2025; CBIC Circular 245/02/2025-GST; CBIC Circular 206/18/2023-GST; CGST Act sections 2(6), 2(31), 2(82), 22 and 49(4).

Last reviewed 8 November 2026.