GST 2.0 on Property Rent: What Landlords and Tenants Must Know in 2025
GST on Rent: Key Facts
- GST Applicability: GST applies to rent charged for commercial properties, and also to residential properties if they are rented for business use. Residential rent for personal use remains exempt from GST.
- Rate Structure (GST 2.0): As of September 22, 2025, the standard GST rate for rent is 18%. Essential items may have a reduced 5% merit rate, while select luxury/sin rentals are charged at 40%.
- Thresholds: Landlords must register and collect GST if annual rental income exceeds ₹20 lakh (₹10 lakh in special category states). Below these thresholds, GST registration and tax are not required.
How GST Applies
| Property Type | GST Applicable? | GST Rate | Who Pays GST? |
| Residential (personal use) | No | Nil | – |
| Residential (business use) | Yes (RCM) | 18% | Tenant (for business) |
| Commercial property | Yes | 18% | Landlord |
For commercial properties, landlords collect and pay GST.
- For residential properties used for business, GST is paid by the tenant under the Reverse Charge Mechanism (RCM).
GST Calculation Example
- Commercial Rent: If rental is ₹50,000/month: GST = ₹50,000 × 18% = ₹9,000/month.
- Residential for business use: GST calculated similarly, but paid by the business tenant.
Exemptions and Special Cases
- No GST on personal residential rentals, or if landlord’s annual rental income is below ₹20 lakh.
- Registered religious/charitable trusts renting commercial property at modest rates (rooms: <₹1,000/day, shops: <₹10,000/month) are exempt.
- Bundled electricity/maintenance with rent is treated as composite supply and taxed at 18%.
Input Tax Credit (ITC)
- Businesses may claim ITC for GST paid on rent for properties used for business, but not on properties used for personal consumption. ITC can also be claimed for repairs/renovations (if not capitalized).
Compliance Notes
- GST registration required if above income threshold.
- Landlords and tenants must issue GST-compliant invoices and file regular returns.
- 10% TDS applies if rent exceeds ₹2.4 lakh/year, separate from GST.
Impact
- The new GST regime may increase costs for business tenants renting homes, reduce marginsns in co-living/student housing, and affect investment in luxury rental properties.
- For landlords and property managers, responsibilities remain unchanged; exemptions for genuine residential lets persist under the new 2025 GST structure.
This summary delivers a clear, updated overview suitable for a Chennai audience involved in property, finance, or business consulting. For more detailed regulations or case-specific advice, refer to the GST Council notifications and authoritative tax guidance.
