GST on Commercial Property Rent in Delhi: A Complete Guide for 2026
Last Updated: July 2026
Navigating the Goods and Services Tax (GST) on commercial property rent is crucial for both landlords and tenants in Delhi. Whether you are renting out an office, shop, or warehouse, understanding the current rate, registration rules, and compliance requirements is essential for financial planning and legal adherence. As of 2026, the framework for GST on commercial rent remains consistent but requires careful attention to detail.
Key GST Details for Commercial Rent
Renting out any commercial property—including shops, offices, godowns, and showrooms—is treated as a supply of service under GST. Here are the quick facts for FY 2026-27
- GST Rate: 18%
- SAC Code: 997212
- Registration Threshold: Mandatory if aggregate turnover exceeds ₹20 lakhs per annum.
- Who Pays: Usually the landlord (Forward Charge), but reverse charge applies in specific scenarios.
It is important to note that commercial rent is straightforwardly taxable, unlike residential property which has specific exemptions [citation
GST Registration & Compliance for Landlords
If the aggregate turnover from all taxable supplies (including commercial rent) exceeds ₹20 lakhs in a financial year, the landlord must register for GST. This is a common point of oversight for owners with multiple properties [citation:5].
Once registered, landlords must adhere to the following compliance requirements [citation:1]:
- Issue GST-compliant invoices for rent and maintenance charges.
- Maintain accurate records of income, GST collected, and Input Tax Credit (ITC) claims.
- File periodic returns (GSTR-1, GSTR-3B).
For tenants who are GST-registered, the 18% GST paid on rent can often be claimed as Input Tax Credit (ITC), provided the space is used for taxable business purposes
Understanding Reverse Charge Mechanism (RCM)
A critical nuance in the 2026 framework is the Reverse Charge Mechanism (RCM). In most cases, the landlord charges and pays the GST. However, RCM applies in the following key situations
- Unregistered Landlord: When a GST-registered tenant rents a commercial property from an unregistered landlord, the tenant is liable to pay the 18% GST directly to the government under RCM. This rule has been in effect since October 2024.
- Residential Property for Business: If a residential dwelling is rented to a registered person for business purposes, the tenant must pay 18% GST under RCM (effective from July 2022).
Quick Reference Table (2026)
| Property Type | Landlord Status | Tenant Status | Use | Who Pays GST? | Rate |
|---|---|---|---|---|---|
| Commercial | Registered | Any | Business | Landlord (FCM) | 18% |
| Commercial | Unregistered | Registered | Business | Tenant (RCM) | 18% |
| Residential | Any | Registered | Business | Tenant (RCM) | 18% |
