GST on Invoices: Everything You Need to Know About Rent Invoices and Compliance Rules

In the realm of Goods and Services Tax (GST) in India, understanding how GST applies to invoices, particularly rent invoices, is crucial for landlords, tenants, and businesses alike. Renting immovable property is classified as a supply of services under GST, attracting specific tax rates and compliance requirements. This comprehensive guide covers GST applicability on various types of rent, invoice formatting, rates, exemptions, and input tax credit (ITC) provisions.

GST Applicability on Rent: Residential vs Commercial Properties

GST rules differentiate between residential and commercial rentals. Renting a residential property for personal use as a dwelling is exempt from GST. However, if a residential property is rented for business purposes or to a GST-registered business, it attracts 18% GST. Commercial properties, regardless of use, are taxable at 18% GST.[1][2][3]

For instance, under the 48th GST Council meeting clarifications, no GST applies if a registered person rents a residential dwelling in their personal capacity for self-residence. This exemption does not extend to proprietorships using the property for business.[1][2]

GST Rates and Charging Mechanism on Rent Invoices

The standard GST rate on taxable rent is 18%. For intra-state supplies, landlords charge 9% CGST and 9% SGST. For inter-state rentals, 18% IGST applies. On every rent invoice, GST must be explicitly mentioned and calculated on the total rent amount.[1][4]

Example: For a monthly rent of Rs. 50,000 on a commercial property in the same state, the invoice shows Rs. 50,000 rent + Rs. 4,500 CGST + Rs. 4,500 SGST = Total Rs. 59,000. Tenants who are GST-registered can claim ITC on this GST paid, offsetting their output tax liability.[1][4]

When Must Landlords Register for GST?

Landlords must register under GST if annual rental income exceeds Rs. 20 lakh (Rs. 10 lakh in special category states like North-Eastern states). Registration requires obtaining a GSTIN, issuing GST-compliant rent invoices with HSN code 9972, collecting tax, and filing returns like GSTR-1 and GSTR-3B.[2][3][4]

Post-registration, every rent invoice must include the landlord's GSTIN, tenant details, rent amount, applicable GST breakup, and total payable. Failure to comply can lead to penalties.[1]

Reverse Charge Mechanism (RCM) for Rent Invoices

In certain cases, GST on rent falls under RCM. For example, when renting from government or local authorities, the registered tenant pays GST directly. For residential properties rented to GST-registered businesses, RCM at 18% applies. The tenant issues a self-invoice and claims ITC if eligible.[3]

Input Tax Credit (ITC) on GST Paid for Rent

GST-registered tenants can claim ITC on GST paid via rent invoices for commercial or business use, provided invoices are valid and conditions met. This reduces their net tax outflow. Landlords cannot claim ITC on expenses related to exempt residential rentals.[1][4]

TDS on Rent and Its Interaction with GST

Tenants must deduct TDS at 10% on rent exceeding Rs. 2.4 lakh annually (from AY 2020-21). TDS is deducted from rent before GST calculation—no GST on TDS amount. Landlords receive net rent after TDS and charge GST on the gross rent.[1][4]

Key Compliance Tips for Rent Invoices Under GST

• Always issue GST-compliant rent invoices with proper breakup of CGST/SGST or IGST.
• Include HSN 9972 for renting services.
• File returns timely to avoid interest and penalties.
• Maintain records of rent agreements and payments.
• For exempt rentals, no invoice needed, but issue rent receipts.

Recent Updates and Exemptions as of 2025

As of September 2025, GST on property renting remains at 18% for business use. Thresholds stay at Rs. 20/10 lakh. Residential rentals for personal use continue exempt. Landlords with turnover below thresholds need not register or charge GST on rent invoices.[3][5]

In summary, mastering GST on invoices, especially rent invoices, ensures seamless compliance. Businesses benefit from ITC, while landlords avoid penalties through proper invoicing. Consult a GST expert for specific scenarios.