GST RCM on Rent Complete Guide for Taxpayers

• Admin
• August 12, 2025

GST RCM on Rent Complete Guide for Taxpayers

GST RCM on Rent: Complete Guide for Taxpayers

1. Introduction

Since the implementation of GST (Goods and Services Tax), there has been a lot of confusion related to GST among business owners and landlords. Especially when it comes to GST Reverse Charge Mechanism (RCM) on rent. If you are also a person who rents out property, it is important that you understand what "GST RCM on Rent" means, when it is applicable, and how it will affect you. In this article, we will explain in simple language what GST RCM is, when it is applicable on rent, how to calculate and file, and also clear your common doubts.

2. What is GST RCM (Reverse Charge Mechanism)?

2.1 Basic Concept of Reverse Charge Mechanism

In the normal scenario of GST, the onus of paying GST lies with the supplier or service provider. Meaning, he collects GST on his services or goods to the government. But in the reverse charge mechanism, this responsibility lies with the buyer. This means that if you are a recipient of any service or goods, then you have to calculate GST on yourself and pay the government.

2.2 Difference between Normal GST vs RCM

• Normal GST: The supplier collects GST and pays the government.
• RCM GST: The buyer calculates and pays GST on himself.

RCM is mainly applicable in cases where the supplier is not GST registered or the government has made RCM rules for certain goods/services.

3. When is GST RCM on rent?

3.1 Residential vs Commercial Property Rent

GST is exempt on residential property rent, so there is no GST RCM. But when the rent of the commercial property is taken or paid, then GST RCM can be applicable.

3.2 RCM in case of unregistered landlord

If you are paying the rent of a commercial property whose landlord is not GST registered, then you will have to calculate and pay GST on yourself as the recipient. This is the main point of the reverse charge mechanism.

3.3 Example

If a business takes office rent from an unregistered landlord, then the business will have to calculate 18% GST on it and pay it to the government.

4. GST on Rent: Role of Supplier vs Recipient

4.1 Responsibilities of the Supplier (Landlord)

• If the landlord is GST registered, then he will charge GST on his rent.
• The registered landlord has to issue an invoice and remit the GST to the government.
• If the landlord is unregistered, then he will not collect GST.

4.2 Responsibilities of Recipient (Tenant/Business)

• If the landlord is unregistered, the recipient has to calculate and pay GST on himself (under RCM).
• The registered recipient declares this GST in the GST return.
• If the recipient is registered, he can claim input tax credit (ITC).

5. Eligibility and Conditions for GST RCM on Rent

5.1 Landlord Registration Status

• RCM applies when the landlord is unregistered.
• RCM is not applicable in the case of registered landlords.

5.2 Property Type

• GST and RCM are applicable only on commercial property rent.
• Residential property rent is GST exempt.

5.3 Status of Recipient

• The recipient must be a registered taxpayer.
• There is no applicability of RCM on unregistered recipients.

5.4 Threshold Limit

• There is no threshold limit on RCM, meaning RCM can be applied to both small or big transactions.

6. How to calculate GST RCM on rent?

6.1 GST Rate on Rent

Generally, commercial rent attracts 18% GST (9% CGST + 9% SGST).

6.2 Calculation Example

If you have to pay a rent of ₹ 50,000, the GST will be:

• ₹50,000 x 18% = ₹9,000
• Total payable amount = ₹59,000 (₹50,000 rent + ₹9,000 GST)

6.3 Input Tax Credit (ITC)

If you are a registered taxpayer and your rent is for business, you can claim ₹9,000 GST in your ITC, subject to GST rules.

7. Return Filing and Compliance for GST RCM on Rent

7.1 Return Filing Process

• The recipient has to report the supply under RCM in his GSTR-1.
• GSTR-3B also has to pay and declare GST.

7.2 Penalty and interest

• If there is a GST payment delay, then interest may be charged.
• Late filing may also attract penalties.

7.3 Importance of Timely Compliance

It is important to make GST payments and return filing on time to avoid penalties and legal complications.

8. Common FAQs on GST RCM on Rent

8.1 Is GST RCM applicable on residential rent?

No, residential rent is GST exempt, so RCM is not applicable.

8.2 Do unregistered landlords have to pay GST?

The unregistered landlord does not collect GST, but the recipient has to pay GST under RCM.

8.3 Is TDS to be deducted under RCM?

Yes, TDS has to be deducted on rent, this is a different compliance from GST.

8.4 How to file GST returns under RCM?

The recipient has to correctly declare RCM transactions in GSTR-1 and GSTR-3B.

 

9. Conclusion

GST RCM on Rent is applicable on the commercial rent of unregistered landlords, which aims to prevent tax evasion. Business owners should make GST compliant keeping in mind the registration status of the landlord. Proper calculations, timely payments, and accurate return filing can help you protect your business from penalties and maintain legal compliance. If necessary, consult your GST consultant.

 

FAQs on GST RCM on Rent

Q1. Is GST RCM applicable on residential property rent?

Nope. GST is exempt on residential property rent, so whether the landlord is registered or unregistered, RCM is not applicable. This exemption is mainly for personal residential use, but if the same property is being used for commercial purposes, then GST may be applicable.

Q2. What is the GST rate on commercial property rent?

Commercial property rents generally  attract 18% GST (9% CGST + 9% SGST). This rate is the same in both cases, whether it is RCM or normal GST.

Q3. Will RCM be applicable if the landlord is GST registered?

Nope. If the landlord is GST registered, he will charge GST on his rent and RCM will not be applicable. In this case, GST is collected through the landlord and deposited to the government.

Q4. Do unregistered landlords have to pay GST?

Unregistered landlord does not collect GST. But if the recipient is registered, then it is the responsibility of that recipient to pay GST under RCM.

Q5. Can I claim GST Input Tax Credit (ITC) under RCM?

Yes. If you are a registered taxpayer and are being used for rent business, then you can claim GST paid in RCM as ITC.

Q6. How to pay GST on RCM?

Under RCM, GST is paid directly to the government through GSTR-3B. Only after payment, you can claim ITC.

Q7. Is TDS also applicable on rent under RCM?

Yes. Both TDS and GST are different compliances. If TDS on rent is applicable, TDS will have to be deducted whether RCM is applicable or not.

Q8. What is the threshold limit for GST RCM on Rent?

The rule of threshold limit is not applicable on RCM. Meaning, whether it is a small amount or a big amount, if the conditions are met, then RCM is applied.

Q9. How is RCM reported in GST returns?

RCM transactions have to  be mentioned in the correct column in GSTR-1 and GSTR-3B. GSTR-3B requires tax liability to be paid and ITC to be claimed.

Q10. What happens if RCM GST is not paid on time?

If you pay GST late, you may have to pay both interest (per month basis) and penalty. The interest rate is according to GST law, which is currently 18% per annum.