If you’re renting out commercial property or providing taxable rental services in a GST-registered setup, it’s crucial to understand how GST (Goods and Services Tax) applies—and whether you’re required to issue a GST invoice.
This guide explains when GST applies to rent, how to generate a compliant GST rent bill, and what landlords and tenants need to know to stay on the right side of tax law.
🏢 1. When Does GST Apply to Rent?
GST is not applicable on residential property rent for personal use, but it is applicable in these cases:
- Renting commercial properties
- Renting residential properties for commercial purposes (like offices or business use)
- When the landlord is GST-registered (i.e., annual turnover exceeds the threshold, typically ₹20 lakh in most Indian states)
If you fall into any of these categories, issuing a GST invoice is mandatory.
🧾 2. What is a GST Rent Invoice?
A GST-compliant rent invoice is an official bill issued by the landlord to the tenant, showing:
- Rent amount
- Applicable GST rate (usually 18% for commercial property rent)
- GSTIN (GST Identification Number) of both parties
- Invoice number and date
- Place of supply
- HSN code for rental services (commonly 9972)
This invoice serves as legal proof of the transaction and is required for proper tax filing and input tax credit claims.
🛠️ 3. How to Generate a GST Rent Bill (Step-by-Step)
Step 1: Use an Invoice Generator or Accounting Software
Use platforms like Zoho Books, Tally, ClearTax, or free GST invoice makers online.
Step 2: Add Basic Details
- Landlord's name, address, and GSTIN
- Tenant’s name, address, and GSTIN (if applicable)
Step 3: Enter Rent Amount and Tax
- Specify rent amount (exclusive of GST)
- Apply 18% GST (or as applicable)
- Break down CGST and SGST (for intra-state) or IGST (for inter-state)
Step 4: Include Invoice Details
- Unique invoice number
- Invoice date
- Period of rent being billed
- HSN Code: 997211 or 997212 (as per service type)
Step 5: Save or Share
- Download as PDF or send via email
- Maintain a record for tax filing
⚖️ 4. Legal Requirements and Compliance
If you're required to issue a GST invoice and fail to do so, you could face:
- Penalties under GST law
- Denial of input tax credit for the tenant
- Scrutiny during audits or inspections
Make sure you:
- Register for GST if your turnover crosses the threshold
- Issue timely invoices (on or before the due date for payment)
- File your GST returns accurately
🔍 5. Frequently Asked Questions
Q: Is GST applicable on residential rent?
No, unless it is rented for commercial/business purposes.
Q: What is the HSN code for rent services?
Use HSN Code 9972 series, depending on property type.
Q: Can a tenant claim ITC on GST paid on rent?
Yes, if the tenant is GST-registered and using the property for taxable business activity.