Leasing and rental services in India are subject to Goods and Services Tax (GST), depending on the type of property or equipment being rented. The applicable GST rate and SAC (Service Accounting Code) vary based on whether the rental service involves residential property, commercial property, machinery, vehicles, or other goods.
In this blog, we will cover:
✅ GST rates for different rental and leasing services
✅ SAC codes for rental transactions
✅ GST exemptions on rental income
✅ How to calculate and file GST on rental services
1. Understanding SAC Codes for Rental & Leasing Services
The SAC (Service Accounting Code) is a classification system under GST used to categorize different types of services. Rental and leasing services fall under SAC Code 9973, which includes:
| SAC Code | Description |
|---|
| 997311 | Leasing or rental of residential property |
| 997312 | Leasing or rental of commercial property |
| 997313 | Rental of industrial properties (factories, warehouses) |
| 997314 | Leasing or rental of machinery and equipment |
| 997319 | Other rental services |
These codes help businesses correctly classify and report rental transactions under GST.
2. GST Rates for Different Rental & Leasing Services
GST on Property Rentals
| Type of Rental | GST Applicability | GST Rate | SAC Code |
|---|
| Residential property for personal use | ❌ No GST | 0% | 997311 |
| Residential property rented to a GST-registered business | ✅ Yes (Under RCM) | 18% | 997311 |
| Commercial property rent (offices, shops, etc.) | ✅ Yes | 18% | 997312 |
| Industrial property rent (factories, warehouses) | ✅ Yes | 18% | 997313 |
GST on Equipment & Vehicle Rentals
| Type of Rental | GST Rate | SAC Code |
|---|
| Machinery & equipment leasing | 18% | 997314 |
| Transport vehicle rental (with operator) | 5% or 12% (depending on vehicle type) | 996601 |
| Transport vehicle rental (without operator) | 18% | 997319 |
GST on Furniture & Other Goods Rentals
| Type of Rental | GST Rate | SAC Code |
|---|
| Renting of furniture & fixtures | 18% | 997319 |
| Leasing of IT equipment (laptops, printers, etc.) | 18% | 997319 |
3. GST Exemptions on Rental Services
✅ No GST on residential property rented for personal use.
✅ No GST if rental income is below ₹20 lakh (₹10 lakh in some states).
✅ No GST on agricultural land leasing for farming activities.
✅ No GST on religious or charitable trusts renting properties for public welfare.
4. How to Calculate GST on Rental Services?
GST Calculation Formula:
Total Rent (per month)×GST%100=GST Amount\text{Total Rent (per month)} \times \frac{GST \%}{100} = \text{GST Amount}Total Rent (per month)×100GST%=GST Amount
Example Calculations:
Example 1: GST on Commercial Property Rent
- Monthly rent: ₹1,00,000
- GST rate: 18%
- GST Amount: ₹1,00,000 × 18% = ₹18,000
- Total rent payable: ₹1,18,000 (₹1,00,000 + ₹18,000 GST)
Example 2: GST on Machinery Rental
- Monthly rent: ₹50,000
- GST rate: 18%
- GST Amount: ₹50,000 × 18% = ₹9,000
- Total rent payable: ₹59,000
5. How to File GST on Rental Services?
1️⃣ Register for GST if your annual rental income exceeds ₹20 lakh.
2️⃣ Issue GST invoices with the correct SAC code and tax details.
3️⃣ File GST returns (GSTR-3B & GSTR-1) monthly or quarterly.
4️⃣ Pay GST online via the GST portal before the due date.