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Rent paid for business or professional purpose can involve TDS, GST and accounting rules. You must check TDS and GST separately, because simply paying rent and recording it as a business expense may not be enough - the conditions are different.
TDS on Rent Limit
TDS is required to be deducted at 10% under section 393(1)[Sl.2(ii).D(b)] when rent is more than ₹50,000 per month or part of a month.
Explore More in Details - TDS on Rent Section With Limits And Rates as per IT Act 2025
Records To Be Maintained
Taxpayer paying rent for business or professional purpose should maintain proper records of:
- Rent paid
- TDS deducted
- TDS deposited
- Challans
- TDS returns
- Rent agreement
- Landlord details
Applicability
TDS on rent becomes applicable for an Individual or Hindu Undivided Family (HUF) only when the person is subject to tax audit under the applicable provisions.
| Activity | Threshold (exceeding) |
| Business | ₹1 crore |
| Profession | ₹50 lakh |
TDS Payment Due Dates
After deducting TDS, the amount must be deposited with the government within the applicable deadline.
| April to February | 7th of the following month |
| March | 30th April |
TDS Return Filing Due Date
The deductor must file TDS return using Form No. 141 on quarterly basis and report the required details.
| Quarter | Due Date |
| Q1-April to June | 31st July |
| Q2-July to September | 31st October |
| Q3-October to December | 31st January |
| Q4-January to March | 31st May |
GST on Commercial Rent
You should not mix up TDS and GST rules as these are separate matters.
Even if there is no TDS requirement, GST may still apply depending on the GST registration status of the landlord and tenant. It may be under Forward Charge Mechanism (FCM) or Reverse Charge Mechanism (RCM).
Here,
- Forward Charge Mechanism (FCM) means the landlord charges GST on the invoice and deposits it with the government.
- Reverse Charge Mechanism (RCM) means that the recipient of a service i.e., the tenant directly calculates, pays and deposits GST with the government.
GST Scenarios for Commercial Rent
| Landlord | Tenant | GST Applicability | Who Need To Pay GST? | Is ITC Available? |
| Registered | Registered | Under FCM | Landlord charges GST in Invoice | Yes, Eligible as ITC |
| Registered | Unregistered | Under FCM | Landlord charges GST in Invoice | No, ITC not available |
| Unregistered | Registered | Under RCM | Tenant pays GST under RCM | Yes, Eligible as ITC |
| Unregistered | Registered (opted for Composition Scheme) | Exempt (RCM not applicable) | No GST payable | No, ITC not available |
| Registered | Registered (opted for Composition Scheme) | Exempt (FCM not applicable) | Supplier of Service | No, ITC not available |
| Unregistered | Unregistered | Exempt | No GST payable | No, ITC not available |
Is Rent Agreement Mandatory?
A rent agreement is commonly used as proof of the business-place address when applying for GST registration.
Using a dummy or inactive rent agreement solely for GST address registration creates unintended tax liability.
If the landlord named in the document is unregistered, the system may show an unpaid RCM obligation.
If unpaid RCM liability is identified, it should be cleared immediately along with applicable interest.
Missing RCM obligations may result in tax notices and compulsory interest charges.
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