GST on residential rent, PG and hostel accommodation
Renting a residential dwelling for use as a residence is exempt from GST. From 18 July 2022 that exemption stops applying where the dwelling is rented to a GST-registered person, and the liability shifts to the tenant under reverse charge. For PG and hostel accommodation, an exemption covers accommodation valued at up to ₹20,000 per person per month supplied for a minimum continuous period of 90 days. Commercial letting is taxable at 18% once the landlord crosses the registration threshold.
The ordinary case: no GST at all
If you own a flat and let it to a family or an individual who lives in it, there is no GST. Renting a residential dwelling for use as a residence is exempt, you do not need to register, and nothing about this changes because the rent is large.
That covers the large majority of individual landlords, and it is worth stating plainly because the 2022 amendment generated a great deal of confusion suggesting otherwise. The exemption for genuinely residential letting to a person who lives there did not go away.
What changed on 18 July 2022
From that date, the residential exemption stopped applying where the residential dwelling is rented to a person registered under GST. The common example is a company taking a flat for an employee, or a business taking residential premises for its own use.
The liability in that situation does not fall on the landlord. It is placed on the recipient under the reverse charge mechanism, so the registered tenant accounts for the GST. An unregistered individual landlord letting to a registered company therefore does not have to register or collect GST on that account, though the commercial terms are usually renegotiated once the tenant discovers the cost.
The distinction being drawn is about the status of the tenant, not the character of the building. The same flat can be outside GST when let to a family and inside the reverse charge when let to a registered firm.
Where the common arrangements land
| Arrangement | GST position |
|---|---|
| Residential flat let to an individual or family as a residence | Exempt |
| Residential dwelling let to a GST-registered person | Taxable, tenant pays under reverse charge |
| PG or hostel, up to ₹20,000 per person per month, minimum 90 continuous days | Exempt under the accommodation entry |
| Short-stay or higher-value accommodation | Assess on its facts; the 90-day entry does not apply |
| Shop, office or other commercial letting | Taxable at 18% once the registration threshold is crossed |
PG and hostel taxation has moved several times and has been litigated. If you run one near the value or duration limits, take advice on your specific structure rather than relying on a summary.
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GST on rent FAQ
Do I have to pay GST on rent from my flat?
Not if you are letting a residential dwelling to someone who uses it as a residence. That is exempt, whatever the rent. The position changes if the tenant is registered under GST, in which case the tenant accounts for the tax under reverse charge rather than you charging it.
Who pays GST when a company rents a flat for its employee?
The company, under the reverse charge mechanism. Since 18 July 2022 the residential exemption does not apply where the dwelling is rented to a GST-registered person, and the liability is placed on the recipient rather than on the landlord.
Is GST payable on PG or hostel rent?
An exemption covers accommodation valued at up to ₹20,000 per person per month supplied for a minimum continuous period of 90 days, which takes most long-stay PGs and student hostels outside GST. Shorter stays and higher per-person values fall outside that entry and need separate assessment.
What is the GST rate on commercial rent?
Commercial letting is taxable at 18%, and the landlord needs to register once turnover crosses the applicable registration threshold. The residential exemption has no application to shops, offices or other commercial premises.
Does a GST exemption mean the rent is tax-free?
No. GST and income tax are independent. Rent from an exempt residential letting is still taxable in your hands under the head Income from House Property, after municipal taxes, the 30% standard deduction and any loan interest.
On RentStalk
Provisions referred to
- Notification 12/2017-Central Tax (Rate) — exemption for renting of residential dwelling for use as residence
- Amendment with effect from 18 July 2022 — withdrawal of the exemption where the dwelling is rented to a registered person, and reverse charge on the recipient
- Exemption entry 12AA — accommodation service up to ₹20,000 per person per month for a minimum continuous period of 90 days, following the 53rd GST Council meeting
This is general information about Indian indirect tax, not tax advice. The treatment of residential letting and of PG and hostel accommodation has changed repeatedly and parts of it have been litigated. Confirm the current position with a qualified professional before relying on it, particularly if you operate near the value or duration limits.