GST on rental income in India: PG, residential and commercial (2026)

Updated 23 July 2026 · 10 minute read

GST on rent confuses landlords because two different taxes get muddled together. Income tax applies to your rental profit no matter how small it is. GST is a separate consumption tax that most small landlords never touch, until one of a few specific triggers pulls them in. This guide is only about the second one. If you want the income-tax side, read how to save tax on rental income in India instead.

Here is the whole subject in one sentence: renting a home is exempt, renting commercial space is taxed at 18%, a PG is exempt only within limits, and none of it matters until your turnover crosses ₹20 lakh — unless a registered tenant flips the liability onto themselves. The rest of this article unpacks that sentence.

The one number that decides everything: ₹20 lakh

GST registration becomes compulsory only when your aggregate turnover crosses ₹20 lakh in a financial year (₹10 lakh in a handful of special-category states). Aggregate turnover is all your supplies added together, taxable and exempt, across every property and business you run under the same PAN.

Two consequences most landlords miss. First, exempt rent still counts toward the ₹20 lakh figure even though no GST is due on it, so a landlord with a large residential portfolio can be dragged over the line by other business income. Second, below ₹20 lakh you are simply outside GST for forward charge; you do not register, you do not charge, you do not file. The overwhelming majority of individual landlords in India live here and can stop reading after the reverse-charge warning below.

Residential property rented as a home: exempt, with one trap

Renting a residential dwelling for use as a residence is exempt from GST. A flat let to a family or an individual to live in carries no GST, full stop, however high the rent.

The trap is the tenant's status. Since 18 July 2022, if you rent a residential dwelling to a GST-registered person — a company taking a flat for its staff, a firm using a house as an office — GST at 18% applies under the reverse charge mechanism (RCM). The important part for you as landlord: the tenant pays that GST directly to the government, not you. You still bill your normal rent.

One carve-out saves the common awkward case. If the registered person rents the home in their personal capacity for their own residence — say a doctor who runs a GST-registered clinic but is simply renting a flat to live in — the exemption holds and no RCM applies. It is the business renting a home that triggers the charge, not merely a tenant who happens to hold a GSTIN.

Commercial property: taxed at 18%, no exemption

Renting out a shop, office, godown, warehouse or any commercial space is a taxable supply at 18% GST. There is no equivalent of the residential exemption here. Who actually pays it depends on who is registered:

• You are registered (turnover over ₹20 lakh): you charge 18% on top of the rent, collect it, and deposit it. Your registered tenant can usually claim it back as input tax credit, so for a business tenant the GST is often cost-neutral.
• You are unregistered but the tenant is registered: since 10 October 2024, the tenant pays the 18% under reverse charge and claims the input tax credit. You do nothing, but be aware your tenant now has a GST obligation tied to your property.
• Both unregistered: no GST applies until you cross the ₹20 lakh threshold.

Because commercial rent has no exemption, this is where landlords most often stumble into compulsory registration — a couple of shops or a small office block can quietly total more than ₹20 lakh a year.

PG and hostels: the messiest category, now with a clear line

PG and hostel GST has been through several reversals, and it is the question most Nestwise PG owners actually ask. The current position, effective 15 July 2024, is a clean two-part test. Accommodation is exempt from GST when both are true:

• the charge is up to ₹20,000 per person per month, and
• the resident stays for a continuous period of at least 90 days.

Meet both and a standard PG or working-professional hostel is exempt, and if that is all you supply you need not even register for GST. Miss either line and GST applies on the accommodation: a premium PG charging more than ₹20,000 a month per bed, or a hostel taking short stays under 90 days, falls outside the exemption and is taxable (commonly at 12% for accommodation, but confirm the rate for your setup). The 90-day test is judged per resident on a continuous basis, so genuinely long-term residents qualify even in a building that also takes short stays.

Not sure which side of the line your PG sits on? Use our free PG GST checker — enter your per-person charge, minimum stay and turnover and it tells you whether GST applies.

Two extra wrinkles for PG operators. Food and services billed on top of the bed can be a separate supply with their own GST treatment, rather than riding on the accommodation exemption. And the income-tax question of whether a serviced PG is business income rather than house-property income is a different analysis entirely — covered in the income-tax guide. GST and income tax reach different answers on the same PG, which is exactly why the two get confused.

The whole thing on one line

And over all of it sits the ₹20 lakh aggregate-turnover threshold for forward charge, plus the reverse-charge rules that can apply regardless of your own turnover.

What this means in practice

• Small residential landlords: you almost certainly owe no GST. The only thing to watch is renting to a company, which shifts an 18% RCM liability onto that tenant.
• Commercial landlords: track your total rent through the year. Crossing ₹20 lakh means compulsory registration and 18% on your invoices from then on — do not discover it at year-end.
• PG owners: price and structure stays with the ₹20,000 / 90-day test in mind. Keep clean records of who stayed how long and what they were charged, because that is exactly the evidence the exemption rests on.

The unglamorous part: records decide your GST position

Every rule above is settled by numbers you have to be able to show: the rent charged per unit, per bed, per month; how long each tenant stayed; your running total across the year against the ₹20 lakh line. Guess at those and you either over-register or get caught under-registered. That per-unit, per-bed, per-month record is precisely what Nestwise keeps automatically — every payment logged, every stay dated, and totals you can actually hand to a CA when the GST question comes up.

Frequently asked questions

More from Nestwise: all guides · saving tax on rental income · free rent receipt generator