GST on Rent: Commercial RCM Rules from 10 Oct 2024

Last reviewed: 25 September 2026

Quick answer: GST under reverse charge on renting of immovable property other than a residential dwelling by an unregistered landlord to a GST-registered recipient became effective from 10 October 2024. The change was introduced through Notification No. 09/2024-Central Tax (Rate), dated 8 October 2024. From 16 January 2025, persons who have opted for the composition levy were excluded from this particular RCM entry.

This guide explains the current GST position on commercial rent, residential rent, RCM, forward charge, ITC, self-invoicing, payment vouchers, security deposits, electricity recovery, place of supply and common compliance errors.

Key GST dates for rent
Commercial rent under GST
RCM from 10 October 2024
Composition taxpayers
Residential rent
GST rate on rent
Input tax credit
Self-invoice and payment voucher
Security deposit and advance rent
Electricity, CAM and reimbursements
Place of supply
Practical examples
Monthly compliance checklist
FAQs

1. Key GST dates for rent

Date	Change
18 July 2022	Renting of a residential dwelling to a registered person was brought under RCM through Entry 5AA.
1 January 2023	Specific residential-rent exemption was clarified for a registered proprietor renting a house in personal capacity for his or her own residence, subject to conditions.
10 October 2024	RCM introduced on renting of immovable property other than residential dwelling by an unregistered person to a registered person.
1 November 2024	Rule 47A became effective, prescribing a 30-day time limit for recipient-issued invoices where self-invoicing is required under RCM.
16 January 2025	Composition taxpayers were excluded from the commercial/non-residential rent RCM entry.

2. Is commercial rent taxable under GST?

Renting of immovable property is treated as a supply of service under GST. Commercial and other non-residential renting is generally taxable unless a specific exemption applies.

The normal GST rate for real-estate services under Heading 9972, other than specifically exempt or specially rated entries, is generally 18% — 9% CGST plus 9% SGST/UTGST for an intra-State supply, or 18% IGST where the supply is inter-State.

Official rate reference: CBIC GST Goods and Services Rates.

3. RCM on commercial rent from 10 October 2024

Notification No. 09/2024-Central Tax (Rate) inserted Entry 5AB in Notification No. 13/2017-Central Tax (Rate). The entry covers:

Service: renting of any immovable property other than a residential dwelling;
Supplier: any unregistered person; and
Recipient: a registered person, subject to the later composition exclusion.

The notification is dated 8 October 2024 but expressly came into force from 10 October 2024. This distinction is important. The effective date is not 1 October 2024 and not 8 October 2024.

Official source: GST Council – CGST Rate Notifications (Notification No. 09/2024-Central Tax (Rate)).

Current commercial-rent matrix

Landlord	Tenant	Property	GST mechanism	Who pays GST?
GST registered	GST registered	Commercial/non-residential	Forward charge	Landlord
GST registered	Unregistered	Commercial/non-residential	Forward charge, subject to landlord's tax position	Landlord
Unregistered	Regular GST registered	Commercial/non-residential	RCM from 10 October 2024	Tenant
Unregistered	Composition taxpayer	Commercial/non-residential	No Entry 5AB RCM from 16 January 2025	Examine landlord's own registration/tax position
Unregistered	Unregistered	Commercial/non-residential	Entry 5AB does not apply	Examine landlord's registration liability

Example: office rent of ₹1,00,000 per month

Assume a GST-registered company rents an office from an unregistered individual landlord for ₹1,00,000 per month.

Monthly rent	₹1,00,000
GST under RCM @ 18%	₹18,000
Amount of GST paid by tenant to Government	₹18,000
Potential ITC, if otherwise eligible	₹18,000

The landlord does not collect this RCM tax from the tenant as output GST. The registered tenant discharges the tax under reverse charge.

4. Composition taxpayers: important change from 16 January 2025

When Entry 5AB first became effective on 10 October 2024, it covered registered recipients generally. That created an issue for composition taxpayers because they normally cannot claim input tax credit.

Notification No. 07/2025-Central Tax (Rate), dated 16 January 2025, amended Entry 5AB to exclude a person who has opted for the composition levy.

Official source: GST Council – Notification No. 07/2025-Central Tax (Rate).

CBIC Circular No. 245/02/2025-GST further clarified that RCM on commercial-property rent for composition taxpayers for the intervening period 10 October 2024 to 15 January 2025 was regularised on an “as is where is” basis.

Official source: Circular No. 245/02/2025-GST.

5. GST on residential rent

Residential rent has a separate RCM rule. Notification No. 05/2022-Central Tax (Rate) inserted Entry 5AA with effect from 18 July 2022 for:

service by way of renting of a residential dwelling;
supplier: any person; and
recipient: any registered person.

Official source: Notification No. 05/2022-Central Tax (Rate).

At the same time, renting of a residential dwelling for use as residence continues to be exempt in the ordinary case where it is not rented to a registered person, subject to the wording of the exemption.

Registered proprietor renting a home personally

From 1 January 2023, the exemption expressly covers a GST-registered proprietor who rents a residential dwelling:

in his or her personal capacity;
for use as his or her own residence; and
on personal account and not on account of the proprietorship concern.

Official source: Notification No. 15/2022-Central Tax (Rate).

Residential-rent matrix

Situation	Broad GST treatment
Residential dwelling rented to an unregistered individual for use as residence	Generally exempt
Residential dwelling rented to a GST-registered company/business	Generally RCM under Entry 5AA
Residential dwelling rented personally by a registered proprietor for own residence	Exemption can apply if the specified conditions are satisfied

The words “residential dwelling”, the contractual recipient and the actual arrangement matter. A property that looks residential physically does not automatically produce the same GST result in every business arrangement.

6. What is the GST rate on rent?

For ordinary taxable renting of immovable property falling under real-estate services, the general rate is 18%. The tax is normally:

9% CGST + 9% SGST/UTGST for an intra-State supply; or
18% IGST for an inter-State supply.

The mechanism — forward charge or reverse charge — determines who pays the tax; it does not by itself change the normal rate.

7. Can the tenant claim ITC of rent GST paid under RCM?

GST paid under reverse charge can qualify as input tax credit, subject to the normal conditions and restrictions under the CGST Act.

For example, if a registered company pays ₹18,000 RCM on office rent used wholly for taxable business activities, it may generally claim the corresponding ITC if all conditions are satisfied and the credit is not blocked or otherwise restricted.

Important: liability to pay RCM and eligibility to claim ITC are separate tests. A taxpayer cannot skip RCM merely because the related ITC is restricted.

CBIC has also clarified that the electronic credit ledger cannot be used to discharge tax payable under reverse charge because RCM tax is excluded from “output tax”. RCM therefore has to be discharged through cash, after which eligible credit may be taken.

Official source: Circular No. 172/04/2022-GST.

8. Self-invoice and payment voucher

When a registered recipient is liable to pay tax under RCM on a supply received from an unregistered supplier, Section 31(3)(f) requires the recipient to issue an invoice — commonly called a self-invoice.

Rule 47A, effective from 1 November 2024, provides that the invoice must be issued within 30 days from receipt of the supply.

Official reference: Notification No. 20/2024-Central Tax and the GST Council material explaining Rule 47A.

Section 31(3)(g) also requires a payment voucher at the time of making payment to the supplier in an RCM case.

Practical documents to maintain

rent or lease agreement;
landlord's PAN and address;
landlord's GSTIN, where registered;
evidence that an unregistered landlord is in fact unregistered;
monthly rent calculation;
self-invoice where applicable;
payment voucher;
bank payment proof;
RCM tax calculation and cash payment evidence;
GSTR-3B reconciliation; and
ITC working and supporting records.

9. Refundable security deposit and advance rent

A genuine refundable security deposit is not automatically treated as consideration merely because it is received. Under the definition of consideration, a deposit is generally not treated as payment for a supply unless the supplier applies it as consideration.

Example: a refundable security deposit of ₹5,00,000 is collected at the start of a lease. Mere receipt of that refundable amount does not ordinarily create GST on the deposit. If ₹1,00,000 is later adjusted against unpaid rent, the amount applied toward rent then has to be examined as consideration for the taxable supply.

Advance rent is different. If an amount is genuinely rent paid in advance and not a refundable deposit, the GST time-of-supply rules must be examined.

10. Electricity, CAM and reimbursements

CBIC Circular No. 206/18/2023-GST gives an important clarification for electricity charges recovered by landlords, real-estate companies, malls and similar entities.

Where electricity is supplied bundled with renting or maintenance of premises, it can form part of a composite supply and follow the tax treatment of the principal supply even if electricity is shown separately.

However, where electricity is recovered on an actual basis and the landlord or real-estate owner acts as a pure agent, the electricity amount may be excluded from the value of the landlord's own supply, subject to the applicable conditions.

Official source: Circular No. 206/18/2023-GST.

Common Area Maintenance (CAM)

CAM and maintenance charges should not automatically be treated as GST-free merely because they are shown separately from rent. Their treatment depends on the contractual structure, supplier, nature of service and valuation provisions. If the landlord supplies CAM as part of the overall letting arrangement, it will normally require GST analysis together with the rental supply.

11. Place of supply for rent

For services directly related to immovable property, the place of supply is generally linked to the location of the immovable property under Section 12(3) of the IGST Act where the relevant parties are in India.

This matters where the tenant's GST registration is in one State but the rented property is in another State. The correct GSTIN, tax type and registration from which RCM is discharged should be reviewed carefully rather than assuming that the head-office GSTIN is always appropriate.

Official reference: IGST Act – Section 12.

12. Does the landlord's registration threshold remove RCM?

No. A common misconception is that if the landlord's rental income is below the normal GST registration threshold, the registered tenant has no GST exposure.

Entry 5AB was specifically designed to cover the case of an unregistered supplier renting non-residential immovable property to a registered recipient. Therefore, a landlord being below the registration threshold does not by itself remove the tenant's RCM obligation.

Separately, a landlord's own registration position must be reviewed based on aggregate turnover, nature of supplies, whether supplies are wholly covered by RCM and the applicable registration provisions. The tenant's RCM obligation and the landlord's registration obligation are related but distinct questions.

13. Director renting personal property to company

Where a director owns property personally and rents it to the company in a private capacity, that rent is not automatically treated as a “director service” merely because the owner is a director. The nature and capacity in which the service is supplied must be considered.

After 10 October 2024, however, if the director-landlord is unregistered, the company is GST registered, and the property is non-residential, Entry 5AB can independently trigger RCM. In that situation RCM applies because of the unregistered-landlord commercial-rent rule, not merely because the supplier is a director.

14. GSTR-3B reporting

RCM liability is generally reported in the reverse-charge portion of GSTR-3B, and eligible ITC relating to tax paid under reverse charge is claimed in the corresponding ITC section subject to statutory conditions.

Businesses should not rely only on GSTR-2B to detect commercial-rent RCM from an unregistered landlord. Since the supplier is unregistered, the accounting and GST compliance system should independently identify such leases every month.

15. Practical examples

Example 1: Registered landlord, registered company

Office rent: ₹1,00,000. Landlord is GST registered. The landlord normally charges ₹18,000 GST under forward charge and issues a tax invoice for ₹1,18,000. Entry 5AB does not apply because the supplier is not unregistered.

Example 2: Unregistered landlord, regular GST-registered company

Office rent: ₹1,00,000. Tenant pays ₹18,000 GST under RCM from 10 October 2024. Eligible ITC may be claimed subject to the law.

Example 3: Unregistered landlord, composition tenant

For periods from 16 January 2025, Entry 5AB does not apply to a recipient who has opted for composition levy. The landlord's own tax and registration position must still be reviewed.

Example 4: Residential flat rented to GST-registered company for employee

The lease is in the company's name. The residential-dwelling RCM rule under Entry 5AA has to be examined. This is different from an employee independently renting a house personally.

Example 5: Registered proprietor takes house for own family

If the proprietor takes the residential dwelling in personal capacity for his or her own residence, and not on account of the proprietorship concern, the specific exemption introduced from 1 January 2023 can apply.

Example 6: Electricity recovered at actual DISCOM bill

If the landlord recovers exactly the actual electricity amount and the arrangement satisfies the pure-agent clarification, the amount may be kept outside the value of the landlord's rental/maintenance supply. If electricity is bundled or marked up, a different result can arise.

16. Monthly GST-on-rent compliance checklist

A business with several leased premises should maintain a property-wise rent master containing at least:

property address and State;
residential dwelling or other immovable property;
landlord name and PAN;
landlord GST registration status;
tenant GSTIN using the property;
regular or composition status;
monthly base rent;
CAM and other recoveries;
electricity treatment;
forward charge or reverse charge;
self-invoice date and number where applicable;
payment voucher details;
RCM cash payment;
ITC eligibility; and
GSTR-3B reconciliation.

17. Common mistakes

Using 8 October 2024 as the effective date: the correct effective date for Entry 5AB is 10 October 2024.
Assuming an unregistered landlord means no GST: the registered tenant may be liable under RCM.
Paying RCM through ITC: reverse-charge tax must be discharged in cash.
Skipping self-invoice: supplies from an unregistered landlord under RCM can require recipient self-invoicing.
Ignoring the composition amendment: Entry 5AB excludes composition taxpayers from 16 January 2025.
Treating all residential rent as exempt: renting a residential dwelling to a registered person has a separate RCM rule.
Claiming ITC automatically: RCM payment does not override normal ITC restrictions.
Assuming separately billed electricity is always outside GST: CBIC's composite-supply/pure-agent clarification must be applied.

18. Frequently asked questions

From which date is RCM applicable on commercial rent from an unregistered landlord?

10 October 2024.

What is the notification?

Notification No. 09/2024-Central Tax (Rate), dated 8 October 2024, effective from 10 October 2024.

Does commercial-rent RCM apply when the landlord is GST registered?

Entry 5AB specifically applies where the supplier is unregistered. A registered commercial landlord will ordinarily charge GST under forward charge, subject to the applicable law.

Does RCM apply if the tenant is unregistered?

Entry 5AB applies to a registered recipient. If the tenant is unregistered, the landlord's own registration and forward-charge liability need to be examined instead.

Does RCM apply to composition taxpayers?

Not under Entry 5AB from 16 January 2025. Circular No. 245/02/2025-GST regularised the intervening 10 October 2024 to 15 January 2025 period on an “as is where is” basis.

Can ITC be claimed on RCM paid on office rent?

Generally yes if the normal ITC conditions are met and no restriction applies.

Can RCM be paid by using existing ITC?

No. RCM liability is not “output tax” and must be discharged in cash.

Is a self-invoice required for an unregistered landlord?

Where the registered recipient is liable under RCM on a supply from an unregistered supplier, Section 31(3)(f) applies. Rule 47A prescribes a 30-day period for issuing the invoice.

Is refundable security deposit subject to GST?

A genuine refundable deposit is generally not treated as consideration merely on receipt. If it is later applied toward rent or another taxable supply, the amount so applied must be examined.

Is residential rent exempt from GST?

Residential dwelling rented for use as residence is generally exempt in the ordinary unregistered-recipient case. Renting a residential dwelling to a registered person is separately covered by RCM from 18 July 2022, subject to the specific proprietor exemption and other applicable conditions.

Conclusion

The most important current rule is straightforward:

If a regular GST-registered person rents non-residential immovable property from an unregistered landlord, GST under RCM generally applies from 10 October 2024.

Businesses should therefore review every lease using four basic questions: What is the property? Is the landlord registered? Is the tenant registered and under which scheme? Who is the contractual recipient?

For larger organisations, a property-wise rent master linked to monthly GST compliance is the safest approach. It should capture forward charge/RCM, self-invoicing, payment vouchers, RCM cash payment, ITC and GSTR-3B reconciliation.

Official sources

Disclaimer: This article is for general educational purposes. GST treatment can depend on the lease terms, parties, place of supply, property classification, registration status and use of the premises. Review material transactions with the applicable law and professional advice before taking a tax position.