From 10 October 2024, any GST-registered business renting commercial property — offices, shops, warehouses, godowns, or factories — from a landlord with no GSTIN must self-assess and pay 18% GST on the rent under the reverse charge mechanism (RCM). Notification No. 09/2024-Central Tax (Rate), issued on 8 October 2024 under §9(3) of the Central Goods and Services Tax Act, 2017 (12 of 2017), inserts S.No. 5AB into the principal RCM notification 13/2017-CT(Rate) and closes a gap that had left commercial premises outside the residential-dwelling RCM added in 2022.
TL;DR for founders
If you rent your office, warehouse, shop, or factory from a landlord who does not have a GSTIN, you now owe 18% GST on that rent — and you pay it yourself to the government, not to your landlord.
- Check your landlord's GST status on the GST portal (gstin.gov.in) before the next payment cycle.
- Pay the RCM from your cash ledger only — your ITC credit ledger cannot be used for this payment.
- Claim the ITC credit in the same GSTR-3B filing period in Table 4(A)(3) — the cash outflow is recovered as input tax credit for standard commercial uses.
What the notification says
Notification No. 09/2024-Central Tax (Rate) (F.No. 190354/149/2024-TO(TRU-II)), issued by Dilmil Singh Soach, Under Secretary to the Government of India, makes the following operative change:
Principal notification amended: Notification 13/2017-Central Tax (Rate), dated 28 June 2017 (G.S.R. 692(E)) — the foundational RCM notification that lists categories of services on which registered recipients must pay GST under reverse charge — is amended by inserting a new serial number.
S.No. 5AB inserted: After existing S.No. 5AA in the Table, a new entry is inserted: "Service by way of renting of any property other than residential dwelling — Supplier: Any unregistered person — Recipient: Any registered person."
Comparison with S.No. 5AA: S.No. 5AA (inserted by a 2022 amendment following the 47th GST Council meeting) already applied RCM to renting of residential dwellings from unregistered persons to registered persons. S.No. 5AB now extends the same logic to all non-residential, commercial property — every property type that is not a residential dwelling falls within its ambit.
Scope of "any property other than residential dwelling": The language is intentionally broad. It covers offices, commercial retail shops, warehouses, godowns, cold storage units, factory buildings, industrial sheds, exhibition spaces, and any other property let for commercial or industrial purposes — so long as the landlord (supplier) is an unregistered person and the tenant (recipient) is a registered person.
Effective date: The notification expressly provides that it "shall come into force with effect from the 10th day of October, 2024" — two days after the date of issue (8 October 2024). This gap is routine for gazette notifications that require a short publication lead-time before taking effect.
Amendment history: The principal notification 13/2017-CT(Rate) was last amended before this via Notification 14/2023-CT(Rate) dated 19 October 2023 (G.S.R. 765(E)). S.No. 5AB is the next entry in sequence after that 2023 amendment pass.
Who is affected
Registered tenants are the primary compliance actors under this notification. Any GST-registered business — companies, LLPs, partnership firms, sole proprietors with GSTIN, professionals — that pays rent for commercial premises to a landlord without a GSTIN bears the RCM obligation. The tenant must self-assess the GST liability, deposit it in cash to the government, and reflect it in its GSTR-3B return. The absence of a GST invoice from the landlord does not relieve this obligation — the lease deed and bank transfer records serve as the underlying documents.
Unregistered landlords are technically the suppliers under S.No. 5AB, but they bear no direct GST obligation on this supply — the reverse charge architecture shifts the entire liability to the registered recipient. A landlord's lack of registration triggers the RCM; it does not create a separate compliance duty on the landlord for that transaction. However, practitioners advising landlord-clients should flag that if aggregate annual turnover from all sources exceeds ₹20 lakh (for service providers in most states), voluntary registration may become obligatory under §22 of the CGST Act — and once registered, the forward-charge mechanism applies and the tenant's RCM obligation ceases.
Registered landlords are unaffected: If the landlord holds a GSTIN and issues a regular tax invoice charging 18% GST on rent, this notification is irrelevant. The forward-charge mechanism continues to govern those transactions.
Practical implications
Cash-ledger-only payment: Under §49(4) of the CGST Act read with Rule 85 of the CGST Rules, 2017, the RCM liability under S.No. 5AB must be discharged exclusively from the electronic cash ledger. The electronic credit ledger (ITC balance) cannot be applied toward any reverse charge liability. Registered tenants must maintain sufficient cash balance in their GST cash ledger by the due date for GSTR-3B filing for the month in which rent is paid; shortfalls attract interest at 18% per annum under §50 of the CGST Act.
ITC eligibility after RCM payment: Once the RCM amount is paid in cash and reported in GSTR-3B, the tenant becomes entitled to an equivalent input tax credit under §16(1) of the CGST Act. This ITC is available in the same or immediately following return period. For offices, warehouses, factories, and retail shops used in the ordinary course of a taxable business, the credit flows without restriction. The credit is blocked under §17(5)(c) only where the property is put to purposes that do not constitute furtherance of business — an unusual situation for standard commercial leases.
GSTR-3B reporting: Report the RCM inward supply in Table 3.1(d) ("Inward supplies liable to reverse charge — Taxable"). Claim the corresponding ITC in Table 4(A)(3) ("Input tax credit — Inward supplies liable to reverse charge"). Both tables in the same return period allow a registered tenant to achieve a net-zero cash impact for the month (cash out for RCM, ITC credit in).
Documentation: Because the landlord is unregistered, no GST invoice is issued by the landlord. The tenant should retain the registered lease deed, monthly rent receipts or bank transfer records, and its own self-assessment working as supporting documentation for the RCM claim and the corresponding ITC credit entry.
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Effective date and transitional provisions
Notification 09/2024-CT(Rate) took effect on 10 October 2024. There are no transitional relief provisions in the notification itself. For existing leases with unregistered landlords that were in place before 10 October 2024:
- Rent payments made entirely before 10 October 2024 are not affected.
- For the month of October 2024, where rent may have been paid in advance or in the first week of October, strictly only the portion of rent attributable to the period from 10 October 2024 onwards attracts RCM (daily proration applies as a matter of principle under the time-of-supply rules in §13 of the CGST Act).
- From the November 2024 GSTR-3B cycle onwards, the full monthly rent to any unregistered commercial landlord is subject to RCM without proration.
Registered tenants who were not aware of this notification and did not discharge RCM liability for October–December 2024 face potential interest exposure under §50 and the possibility of demand-and-recovery proceedings under §73 of the CGST Act. A voluntary disclosure with interest payment in a subsequent GSTR-3B is the recommended course of action for missed periods.
Founder checklist
- Verify your landlord's GSTIN status via the GST portal for every commercial property lease currently in effect — unregistered status triggers your RCM obligation from 10 October 2024
- Maintain adequate cash balance in your electronic cash ledger each month before the GSTR-3B due date to discharge the RCM on commercial rent without interest
- Report RCM in GSTR-3B Table 3.1(d) and claim the corresponding ITC credit in Table 4(A)(3) in the same period
- Brief your accounts and finance teams on the two-ledger rule: RCM must be paid from cash — the ITC ledger cannot be used for payment — and the credit is then recoverable in the same return
- For leases signed before 10 October 2024 with unregistered landlords: review the outstanding October 2024 RCM liability, pay with interest if not already discharged, and factor the ongoing RCM cost into lease renewal negotiations
- If a landlord registers under GST during the tenancy, verify their GSTIN on the portal and obtain a tax invoice for the next rent period — the RCM obligation ceases once forward-charge invoicing begins
FAQ
Does the commercial property RCM apply if my landlord charges rent below ₹5,000 per month?
There is no de minimis threshold in S.No. 5AB of Notification 13/2017-CT(Rate). The RCM obligation applies to any amount of rent paid to an unregistered landlord for commercial property from 10 October 2024 onward, regardless of how small the rent.
My landlord registered under GST after October 2024. Does the RCM obligation stop immediately?
Yes. Once the landlord obtains a GSTIN and issues a regular tax invoice, the forward-charge mechanism applies — the landlord collects and remits GST. The tenant's RCM obligation under S.No. 5AB ceases from the date the landlord becomes registered and issues tax invoices. Verify registration on the GST portal before the next rent payment cycle.
Can I use ITC balance to pay the RCM tax on commercial rent?
No. Under §49(4) of the CGST Act read with Rule 85 of the CGST Rules, reverse charge liabilities must be paid from the cash ledger only — the ITC ledger cannot be used to discharge RCM. Once you pay the RCM in cash and file GSTR-3B, the same amount becomes available as ITC in your credit ledger (subject to §17 restrictions on the nature of use).
Where in GSTR-3B do I report commercial property RCM?
Report the inward supply in Table 3.1(d) of GSTR-3B as "Inward supplies liable to reverse charge". The corresponding ITC can be claimed in Table 4(A)(3) of GSTR-3B in the same or following period after the cash deposit.
Is this RCM applicable if I (a registered person) rent commercial space to another registered person — i.e., can I sub-let?
S.No. 5AB places the RCM obligation on the registered person who receives the service from an unregistered person. If you (a registered person) sub-let commercial property you originally took from an unregistered landlord, your RCM on the head lease continues. The sub-lease you grant is a taxable forward-charge supply on which you collect GST from your sub-tenant.
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Sources
- Notification No. 09/2024-Central Tax (Rate), dated 8 October 2024 — CBIC, Ministry of Finance (Department of Revenue), effective 10 October 2024
- Notification No. 13/2017-Central Tax (Rate), dated 28 June 2017 (G.S.R. 692(E)) — Principal RCM notification under §9(3) of the CGST Act, 2017, as last amended by Notification 14/2023-CT(Rate) dated 19 October 2023 (G.S.R. 765(E))