Real Estate

Rent Agreement for GST Registration in India

When a business or tax payer is taking GST registration and is having their business premise rented or taken on lease, then the rental agreement shall be furnished or submitted along with the other documents. A failure to submit the same shall give way to the issuing of a show-cause notice to the tax payer.

It is to be noted that the rental agreement should be issued on stamp paper and the value of this shall be determined on the basis of the law or rule prevailing in each state pertaining to the same. In each state, the value of stamp paper for issuing the rental agreement would change and this shall be a minimum of INR 100. The GST officials shall also issue or serve a show-cause notice if the value of the stamp paper is lower than what is required by law.

In case of the rented business premise of GST registration online, the rental agreement or the furnishing of rent slip shall provide proof for the same. This is because the rental agreement can be used to define the terms and conditions or basis of the relationship between the owner of the property and the tenant or the person who has taken the same on rent. This can also be issuing a relationship between the lesser and the lessee. But this cannot be used as the basis for determining the ownership of the property where business is set.

Along with the rental agreement it is recommended that the electricity bill or copy of Municipal Khata or a property tax receipt shall be issued such that there is no show-cause notice issued for the furtherance of the validity of the proof.

It should be noted that the GST Authorities are taking necessary steps to mitigate and avoid any uploading of fake rental agreements by the business owners or tax payers such that the registration obtained is valid.

The rent agreement uploaded or submitted on the GST platform should be in PDF format and exceed a size of 200 KB.

Format of Rent Agreement for purpose of GST Registration

The form of the rental agreement which is to be submitted with the GST Authority for the registration of GST shall be having the following elements complied with:

– The details of the owner and the tenant or the lesser and the lessee.

– The purpose of the rental agreement should also be stated clearly by the rental agreement.

The following extra points shall also be complied with while writing or preparing a rental agreement;

– The term of the lease which mostly would be a minimum of 11 months?

– The notice period is to be compiled with by the tenant for any premature termination of the agreement along with any compensation to be paid.

– The activities or nature of activities for which the rented premise can be used, say residential or commercial purpose.

– The responsibilities held by the tenant to be complied with while returning the property or premise to the owner.

– Responsibilities held by tenant to comply with on a fixed basis like any alteration’s repairs or such other expenses.

– Security deposit made by the tenant and the terms for refunding the same.

– Payment or sharing of the electricity, water, taxes, or such other payment connected with the premise.

– Details of any rental advance or prepay made by the tenant.

It is to be noted that the rental agreement should be submitted along with other necessary documents as mandated by the GST authorities and the provisions of law. The rental agreement also would serve as one major proof for the place of business provided the same was rented. The tax payer of income tax return filing online should select the type or nature of the premise held by him for the purpose of operating or running the business. And if this is stated to be leased or rented rather than being owned or taken on consent, then the rental agreement or rent payment slip would serve as the major documentary proof for the same. But it would be recommended high if the same is coupled with the property tax receipt or electricity bill or water bill or Municipal Khata copy as it would increase the validity of the same.

It is vital that an updated and renewed rental agreement is provided or furnished by the tax payer such that it is a valid agreement as the same is prevailing and is continued as on the date of obtaining the GST registration also.


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