GST on Rent payable of Commercial Property

Save Share

This query is : Resolved

Quick Summary

This discussion clarifies the Goods and Services Tax (GST) and Tax Deducted at Source (TDS) implications when a company rents commercial property. It explains that Reverse Charge Mechanism (RCM) for GST is generally not applicable if the landlord is unregistered. However, TDS under Section 194-I of the Income Tax Act is applicable on commercial rent payments, regardless of the landlord's GST registration status, provided the monthly rent exceeds ₹50,000 and the tenant is a company. Refundable security deposits are typically not subject to GST.

Keyur

Keyur (Querist)
Follow

17 January 2024 Sir/Madam

I have one query regarding company pay Rent of Commercial Property taken on Rent for Office purpose. Monthly Rent is of Rs.2,50,000/- and company also pay deposit of Rs. 8,00,000/- as per Agreement with the owner of property.

What is the GST liability and TDS liability to the Company and also to the owner of Commercial Property.

thanks in advance.

RAJA P M

RAJA P M (Expert)
Follow

19 January 2024 Are You asking about GST Tax compliance or TDS only...??? what about landlord's GST status....??

CS Advocate Abhishek Goyal

CS Advocate Abhishek Goyal (Expert)
Follow

19 January 2024 The owner of commercial property to collect 18% GST from company and discharge the same through his GST returns.
Company to deduct TDS u/s 194I of the Income Tax Act.

Keyur

Keyur (Querist)
Follow

16 February 2024 Sir,

thanks for clarify me. one more question. owner of property have no gst no due to not liable to register under gst laws. (Individual) then company have to deduct rcm on this monthly rent? Company deducted tds on Rent @ 10%

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)
Follow

13 August 2025 1. Is RCM applicable if landlord is unregistered?
➡️ NO, Reverse Charge Mechanism (RCM) is not applicable on renting of commercial property if the supplier (landlord) is an unregistered person.
RCM under GST for rent is only applicable under specific notifications, like for direct services from government bodies, advocates, GTA services, etc.
There is no provision under GST that mandates RCM for rent paid to an unregistered individual landlord.
So, no GST is payable under RCM by the company in your case.
2. What if landlord crosses the threshold limit?
If the landlord's aggregate turnover exceeds ₹20 lakhs (or ₹10 lakhs in some states), he is required to register and then must collect and discharge GST on rent.
But since the landlord is not registered, it's assumed he is below the threshold, and hence no GST collection or payment.

✅ TDS Liability:
TDS under Section 194-I of the Income Tax Act is applicable since:
The rent is for commercial property
Monthly rent exceeds ₹50,000
Tenant is a company (liable to deduct)
➤ Rate:
10% TDS (if PAN is available)
20% if PAN not furnished
TDS is applicable irrespective of whether the landlord is registered under GST or not.
✅ Security Deposit:
Refundable deposits (without adjustment against rent) are not subject to GST.
But if the deposit is adjusted against rent or forfeited, it may attract GST at that time, if the landlord is registered.
✅ Final Answer:
Aspect Applicability
GST (RCM) ❌ Not applicable (since landlord is unregistered)
GST (Forward) ❌ Not charged (since landlord not registered)
TDS u/s 194-I ✅ Applicable @10%
On Security Deposit ❌ Not taxable unless adjusted or forfeited

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now

Join CAclubindia WhatsApp Finance Community & stay updated with the latest TAX news, compliance alerts and important updates all in one place!