# Commercial Lease Agreement

> A commercial lease covers rent and escalation, lock-in, security deposit, fit-out and restoration, maintenance, permitted use, sub-letting and exit. Leases of a year or more must be registered, and commercial rent attracts 18% GST if the landlord is registered (and reverse charge in some cases where the landlord is unregistered). The tenant deducts TDS on rent at 10% above ₹50,000 a month for buildings.

Practice: Legal Documents & Agreements — https://www.industax.com/services/legal-documents/

Long commercial leases carry real money: a five-year lock-in or a restoration clause can cost more than the rent saving. We review the commercial terms alongside the legal ones and flag GST, TDS and stamp duty costs before signing.

Since October 2024, GST on renting of commercial property by an unregistered person to a registered business is payable by the tenant under reverse charge, which tenants often miss.

## Key facts

| Item | Detail |
| --- | --- |
| Registration | Required for leases of 1 year or more |
| GST | 18%; reverse charge where an unregistered landlord lets to a registered tenant |
| TDS on rent (building) | 10% above ₹50,000 a month |
| Key commercial terms | Lock-in, escalation, fit-out, restoration, renewal |

## Who needs this

- Businesses leasing offices, shops or warehouses
- Landlords letting commercial property
- Startups signing their first office lease

## What's included

- Lease drafting or review
- GST, TDS and stamp duty analysis
- Negotiation points
- Registration guidance

## Documents

- Draft lease or term sheet
- Property documents
- Party KYC and GST details

## Process

1. **Review** — Commercial and tax terms analysed.
2. **Draft** — Lease drafted or redlined.
3. **Register** — Stamped and registered.

## FAQs

### Is GST payable on commercial rent?

Yes, at 18%. A registered landlord charges it; where an unregistered landlord lets commercial property to a GST-registered tenant, the tenant pays it under reverse charge and can usually claim the credit.

### Who pays stamp duty on a lease?

Usually the tenant, by agreement. The amount depends on the state, the lease term, rent and deposit.

### What is a lock-in period?

A period during which neither party (or only one) can terminate the lease. Exiting during lock-in usually means paying rent for the remaining lock-in period.

## Official sources

- India Code — central Acts: https://www.indiacode.nic.in/

---
Canonical page: https://www.industax.com/services/legal-documents/commercial-lease-agreement
Publisher: Indus Tax — CA-led tax and compliance firm (https://www.industax.com). Contact: info@industax.com, 9059139258.
This is general information, not advice for your specific facts.