GST on Renting of Immovable Property: The Six-Scenario Chart Everyone Shares — and the Four Things It Gets Wrong
Tax · GST · India · August 2026
GST on Renting of Immovable Property: The Six-Scenario Chart Everyone Shares — and the Four Things It Gets Wrong
A six-row chart on GST for landlords and tenants circulates constantly on LinkedIn and WhatsApp. It is a genuinely useful format: landlord status, property type, tenant status, and who pays. The framework is right, the 18% rate is right, and the place-of-supply rule is right.
But the versions in wide circulation contain four errors, and two of them will make you pay tax you do not owe or miss tax you do. One row marks an exempt transaction as taxable at 18%. Another says no reverse charge applies where the law says it does. Here is the corrected table, with the notification behind every row.
Quick Summary
Renting immovable property is a supply of service taxed at 18%. Commercial rent from an unregistered landlord to a registered tenant went under reverse charge from 10 October 2024, not 1 October. Residential dwelling let to a registered person attracts RCM whether or not the landlord is registered. Residential let to an unregistered person for use as a residence is exempt, not taxable. And the registration threshold for a landlord is ₹20 lakh, not ₹40 lakh, because renting is a service.
The framework the chart gets right
Start with what is not in dispute. Renting of immovable property is a supply of service under GST, classified under SAC 9972. Where it is taxable, the rate is 18% — 9% CGST plus 9% SGST for an intra-state supply, or 18% IGST where the supply is inter-state.
The place of supply is the location of the immovable property, not the location of the landlord or the tenant. A Mumbai-based landlord renting a shop in Hyderabad to a Chennai company makes a supply located in Telangana, and that single rule decides the CGST-SGST against IGST question in every case.
Liability then falls one of two ways. Under forward charge, the landlord charges GST on the invoice and deposits it. Under reverse charge, the tenant self-assesses the tax, pays it in cash, and claims input tax credit if eligible. Which applies depends on three variables the chart correctly identifies: what kind of property, whether the landlord is registered, and whether the tenant is registered.
The corrected six-scenario table
Corrections are marked. Every row assumes the property is used for the purpose its type suggests, which is the assumption that quietly does most of the work here.
| # | Landlord | Property | Tenant | Correct treatment | Who pays |
|---|---|---|---|---|---|
| 1 | Registered | Commercial | Any | Taxable at 18% | Landlord, forward charge |
| 2 | Unregistered | Commercial | Registered | Taxable at 18% under RCM, w.e.f. 10.10.2024 — not 01.10.2024. Composition taxpayers excluded from 16.01.2025 | Tenant, reverse charge |
| 3 | Unregistered | Commercial | Unregistered | Outside GST until the landlord crosses the registration threshold of ₹20 lakh (₹10 lakh in special category states) — not ₹40 lakh | Landlord, forward charge, after registering |
| 4 | Registered | Residential dwelling | Unregistered | Exempt, not taxable, where let for use as a residence. Entry 12 of Notification 12/2017-CT(R) | Nobody. No GST arises |
| 5 | Unregistered | Residential dwelling | Registered | Taxable at 18% under RCM, w.e.f. 18.07.2022 | Tenant, reverse charge |
| 6 | Registered | Residential dwelling | Registered | Taxable at 18% under RCM, not forward charge. Entry 5AA applies whatever the landlord’s status | Tenant, reverse charge |
Why rows 4 and 6 matter in rupees
On a residential flat let at ₹60,000 a month, row 4 as commonly drawn would have a registered landlord charging 18% GST — ₹1,29,600 a year — on a supply that is exempt. That is tax collected without authority of law, and it exposes the landlord, not the tenant.
Row 6 fails in the opposite direction. A company renting a flat for an employee from a registered landlord would, following the chart, expect the landlord to invoice GST. In fact the company owes ₹1,29,600 a year under reverse charge, payable in cash. Discovering that at audit means interest and penalty on top.
The three reverse charge entries, decoded
All reverse charge on rent flows from three entries in Notification 13/2017-Central Tax (Rate). Almost every dispute in this area comes from reading one entry and assuming it governs the others.
| Entry | Covers | Landlord must be | Tenant must be | In force from |
|---|---|---|---|---|
| 5A | Renting by Government or local authority | Government or local authority | Registered person | Existing |
| 5AA | Renting of residential dwelling | Any person — registered or not | Registered person | 18.07.2022 (Notification 05/2022) |
| 5AB | Renting of immovable property other than residential dwelling | Unregistered person only | Registered person, excluding composition taxpayers from 16.01.2025 | 10.10.2024 (Notification 09/2024) |
The critical asymmetry sits in the third column. For commercial property, reverse charge is triggered by the landlord being unregistered; if the landlord is registered, they invoice GST normally. For residential property, the landlord’s status is irrelevant — entry 5AA is triggered by the tenant being registered, full stop. Applying the commercial logic to a residential letting is precisely the mistake in row 6.
Two footnotes on entry 5AB that charts omit
A corrigendum was needed. As first notified, entry 5AB read “any property”, which would have swept in movable property too. A corrigendum dated 22 October 2024 corrected it to “any immovable property”.
Composition taxpayers were carved out. Following the 55th GST Council meeting, Notification 07/2025-CT(R) dated 16 January 2025 excluded composition levy taxpayers from 5AB. The period from 10 October 2024 to 15 January 2025 was regularised on an “as is where is” basis — meaning composition dealers who already paid under RCM in that window do not get a refund.
The residential exemption, and the trap inside it
Entry 12 of Notification 12/2017-CT(R) exempts “services by way of renting of residential dwelling for use as residence”. Notification 04/2022 amended it from 18 July 2022 to add the words “except where the residential dwelling is rented to a registered person”.
So the exemption survives in full for the ordinary case: a salaried tenant renting a flat to live in pays no GST, and the landlord needs no registration for that activity. What changed in 2022 is only the registered-tenant case.
Two conditions inside that entry do the real work, and both are about use rather than construction. The property must be a residential dwelling, and it must be let for use as a residence. A flat let as a company guest house, an office or a godown fails the second test and is taxed as commercial renting regardless of how the building is classified.
Exempt
Exempt
RCM 18%
Commercial rules
The personal capacity exception
A GST-registered proprietor who rents a flat to live in is not automatically caught by entry 5AA. Notification 15/2022-CT(R) dated 30 December 2022 clarified that where a proprietor rents a residential dwelling in personal capacity, for use as their own residence, on their own account and not in the course of business, the exemption holds. A High Court has since accepted that clarification as binding.
The evidentiary test is practical rather than legal. If the rent is paid from personal funds, not booked in business accounts, not claimed as a business deduction and not reimbursed by the firm, the personal character stands. Book it as a business expense and you have made the department’s argument for it.
The ₹20 lakh point, and why ₹40 lakh is wrong
Row 3 of the circulating chart says a landlord must register once turnover crosses ₹40 lakh. That is the threshold for a supplier of goods. Renting immovable property is a supply of service, and under Section 22(1) of the CGST Act the threshold for services is ₹20 lakh, reduced to ₹10 lakh in special category states.
The error is not academic. A landlord with ₹28 lakh of annual commercial rent who relies on a ₹40 lakh figure is unregistered when the law requires registration — accumulating unpaid tax, interest and penalty on every month of rent.
Aggregate turnover means everything, not just rent
The threshold is tested against aggregate turnover across all supplies on the same PAN, all-India — taxable, exempt and exported alike. A consultant with ₹16 lakh of professional fees and ₹9 lakh of commercial rent has aggregate turnover of ₹25 lakh and must register, even though neither stream crosses ₹20 lakh alone.
Exempt residential rent counts towards aggregate turnover too, even though it attracts no tax. This surprises landlords who assume an exempt supply is invisible to the threshold test.
Place of supply and input tax credit
Place of supply for renting is the location of the property. If the property and the supplier are in the same state, the supply is intra-state and attracts CGST at 9% plus SGST at 9%. If they are in different states, it is inter-state and attracts IGST at 18%.
This has a practical consequence for landlords with property in more than one state: GST registration is state-specific, so a landlord letting commercial premises in two states may need registration in both.
On credit, a registered tenant paying GST on commercial rent — whether under forward charge or reverse charge — can generally claim input tax credit, provided the property is used for business and the documentation is in order. Tax paid under reverse charge must be discharged in cash, not by using existing credit balance; the credit becomes available only afterwards. Section 17(5) separately blocks credit on goods and services used to construct immovable property on one’s own account, which is a different question from renting one.
Reverse charge is not a paperwork formality
Where a tenant is liable under RCM and the landlord is unregistered, the tenant must self-invoice, pay the tax in cash through GSTR-3B, and report it correctly. Waiting for a bill that will never arrive is the most common way this obligation is missed — and interest runs from the due date, not from the date the error is noticed.
Exemptions beyond the residential entry
The chart notes exemptions for charitable and religious trusts, which is right as far as it goes. Notification 12/2017-CT(R) exempts renting of certain precincts of a religious place meant for the general public by a registered charitable or religious trust — but only subject to monetary limits specified in that entry. Above those thresholds, the supply is taxable in the normal way. Presenting the exemption without its limits is how trusts end up with unexpected liability.
Two other carve-outs are worth knowing: leasing of agricultural land for agricultural purposes is exempt, and long-term leases of thirty years or more of industrial plots by specified entities have their own treatment under Circular 101/20/2019-GST.
Your compliance checklist
- Classify the property by use, not by build. A flat let as an office is commercial for GST. Get the rent agreement to state the permitted use plainly.
- Establish both parties’ registration status in writing, and re-confirm it periodically. Your liability flips entirely on the other side’s status.
- If you are a registered tenant, run the RCM test every month. Residential dwelling plus registered tenant equals RCM regardless of landlord. Commercial plus unregistered landlord equals RCM unless you are a composition taxpayer.
- Self-invoice where RCM applies and pay in cash through GSTR-3B. Claim the credit in the following step, if eligible.
- Test aggregate turnover across all your supplies, not rent alone, against ₹20 lakh or ₹10 lakh as applicable.
- Keep the personal-capacity evidence if you are a registered proprietor renting your own home: personal bank payment, no entry in business books, no deduction claimed.
- Do not confuse GST with TDS. Section 194-I requires 10% TDS on rent above ₹2.4 lakh a year, deducted on the pre-GST amount. The two obligations run independently.
Frequently asked questions
Is GST payable when a registered landlord rents a house to a salaried tenant?
No. Renting a residential dwelling for use as a residence to an unregistered person is exempt under entry 12 of Notification 12/2017-CT(R), and the landlord’s own registration status does not change that. Charts showing this row as taxable at 18% are wrong. The exemption fails only if the property is let for a non-residential use.
If my landlord is registered and I am registered, and the property is a flat, who pays GST?
You do, under reverse charge. Entry 5AA covers renting of a residential dwelling by any person to a registered person, so the landlord’s registration is irrelevant. This is the row most circulating charts get wrong by showing forward charge. The exception is where you have taken the flat in your personal capacity as your own residence.
From what date does reverse charge apply on commercial rent from an unregistered landlord?
10 October 2024, under entry 5AB inserted by Notification 09/2024-Central Tax (Rate) dated 8 October 2024. Charts frequently show 1 October 2024, which is incorrect. A corrigendum dated 22 October 2024 also clarified that the entry covers “any immovable property” rather than “any property”.
What is the GST registration threshold for rental income?
₹20 lakh of aggregate turnover, or ₹10 lakh in special category states. The ₹40 lakh figure that appears on many charts is the threshold for suppliers of goods and does not apply, because renting immovable property is a supply of service. Aggregate turnover includes all supplies on your PAN, including exempt ones.
I am a registered proprietor renting a flat to live in. Do I owe GST under RCM?
Generally no. Notification 15/2022-CT(R) clarified that a proprietor renting a residential dwelling in personal capacity, for use as their own residence and on their own account, remains exempt, and a High Court has accepted that position. Keep the rent out of your business books and do not claim it as a business deduction.
Does a composition dealer have to pay RCM on rent?
Not on commercial property from an unregistered landlord: composition taxpayers were excluded from entry 5AB with effect from 16 January 2025. They remain covered by entry 5AA for residential dwellings taken on rent. Composition dealers also cannot claim input tax credit on RCM tax paid, so it is a pure cost.
Can I claim input tax credit on GST paid on rent?
Generally yes for a regular registered person, where the property is used for business and documentation is in order, whether the tax was paid under forward or reverse charge. Tax under RCM must first be paid in cash rather than adjusted against existing credit. Credit is not available where the rented premises are used for personal consumption.
Which state’s GST applies if my property is in another state?
The place of supply is the location of the immovable property. If your location and the property are in the same state, charge CGST at 9% plus SGST at 9%; if they differ, the supply is inter-state and IGST at 18% applies. Because registration is state-specific, property in multiple states may require registration in each.
Are charitable and religious trusts fully exempt on renting?
No, the exemption is conditional. Notification 12/2017-CT(R) exempts renting of specified precincts of a religious place meant for the general public by a registered trust, but only within monetary limits stated in the entry. Rent above those limits is taxable normally. Verify the current thresholds in the notification before relying on the exemption.
The short version
The circulating chart has the right architecture and four wrong details. Commercial reverse charge started on 10 October 2024, not 1 October. The landlord’s registration status is irrelevant to residential lettings — entry 5AA turns on the tenant alone, so a registered landlord letting to a registered tenant is an RCM case, not a forward charge one. A residential dwelling let to an unregistered person for use as a residence is exempt, not taxable at 18%. And the registration threshold is ₹20 lakh, because renting is a service. Everything else — the 18% rate, the CGST-SGST split, place of supply following the property — is sound. Check the row that applies to you against the notification, not against the graphic.
