GST on Shop Rent: RCM When the Landlord Is Unregistered

Updated 21 October 2026 · By Ashok Sachdev · Sources: Notification 09/2024 and 07/2025-Central Tax (Rate); CGST Rule 47A; CBIC Circular 211/5/2024-GST. Not tax advice; confirm with your CA.

Before October 2024, rent paid to a landlord without a GSTIN usually carried no GST at all. Many shop owners still do not know the rule changed, and the gap often shows up in a notice or at the CA's year-end review. This guide covers who pays, how much, the paperwork and how to get the money back as credit.

In short

• Who pays: a GST-registered tenant (regular scheme) renting a shop, office or godown from an unregistered landlord.
• How much: 18% of the rent (9% CGST + 9% SGST for a shop in your own state).
• Not covered: a registered landlord (he charges GST on his own bill), an unregistered tenant, a composition-scheme tenant, or a residential dwelling.
• Paperwork: a self-invoice within 30 days of receiving the service (Rule 47A), plus a payment voucher when you pay the rent.
• Payment: in cash through the electronic cash ledger. Existing input credit cannot be used to pay it.
• Credit: the RCM paid is normally available as input tax credit in the same return.

Which situation are you in?

A shop or godown is not a residential dwelling, even when the building is mostly flats. For mixed-use units, such as a ground-floor shop with a room behind it on one agreement, get your CA's view.

What the law says

Notification 09/2024-Central Tax (Rate), dated 8 October 2024, added serial number 5AB to the reverse-charge list in Notification 13/2017-Central Tax (Rate):

• The entry came into force on 10 October 2024.
• A corrigendum dated 22 October 2024 changed "any property" to "any immovable property". Renting machinery or other movable goods is not covered.
• Notification 07/2025-Central Tax (Rate), dated 16 January 2025, inserted "other than a person who has opted to pay tax under composition levy" in the recipient column.

If you were a composition dealer between 10 October 2024 and 15 January 2025, ask your CA how rent for that period was treated. The exclusion is written into the notification from 16 January 2025.

Also note that the recipient column covers only registered persons. An unregistered shop renting from an unregistered landlord does not become liable, so it does not need a GSTIN just because of this entry.

Worked example: ₹30,000 a month

EXAMPLE figures. A clothing shop in Ahmedabad has regular GST registration in Gujarat and pays ₹30,000 a month in rent to a landlord who has no GSTIN. The shop is in Gujarat, so the tax is CGST plus SGST.

Where you can use the credit, the net cost is zero. But the cash leaves your account every month, and the credit only helps if you have output GST to set it against. A shop selling mostly exempt or 0% items may build up credit it cannot use soon. Include this in your cash planning.

When the tax is due

Under section 13(3) of the CGST Act, the time of supply for a reverse-charge service is the earlier of:

• the date of payment, as entered in your books or debited in your bank account, whichever is earlier; or
• the date of the invoice issued by you as recipient, where the recipient has to issue it.

For most shops that pay rent on time, this means the month in which you pay the rent. Rent paid in advance, or in arrears for several months, can shift the month, so work through it with your CA.

Self-invoice and payment voucher: what to put on them

The landlord will not give you a GST invoice, so the law makes you issue one to yourself. Section 31(3)(f) requires the invoice. Section 31(3)(g) requires a payment voucher when you pay the supplier. Rule 47A, inserted by Notification 20/2024-Central Tax from 1 November 2024, sets the deadline: the invoice must be issued "within a period of thirty days from the date of receipt of the said supply".

Keep the rent agreement, the self-invoice, the payment voucher and the bank entry for each month together. That is the full trail an officer or auditor will ask for.

Paying it and claiming the credit

1. Report the liability. In GSTR-3B for the month, show the rent and the tax as inward supplies liable to reverse charge (Table 3.1(d)).
2. Pay in cash. CBIC Circular 211/5/2024-GST states that the recipient issues the invoice under section 31(3)(f) and pays "the tax in cash" under RCM. Your input credit balance cannot be used for this.
3. Claim the credit. In the same GSTR-3B, take the tax as input tax credit on inward supplies liable to reverse charge (Table 4(A)(3)), provided the shop is used for your business and the usual conditions of section 16 are met.
4. Mind the time limit. The same circular clarifies that for RCM supplies from unregistered persons, the relevant financial year for the section 16(4) time limit is the year in which the self-invoice is issued.

New to input credit? Read input tax credit for retail shops. For where GSTR-3B fits in the month, see GSTR-1 vs GSTR-3B.

Common mistakes

• Paying from the credit ledger. RCM must be paid in cash. Using the credit balance leaves the tax unpaid.
• No self-invoice. Paying the tax without the invoice weakens your credit claim. Issue it within 30 days.
• Composition shops still paying. Since 16 January 2025, a composition dealer does not pay RCM on rent from an unregistered landlord.
• Assuming the landlord is unregistered. Check his GSTIN on the portal. If he is registered, he must charge GST on his bill and RCM does not apply.
• Forgetting godowns and offices. The entry covers any immovable property other than a residential dwelling, not just the shop.

Is a composition shop better off now?

For RCM on rent, yes: a composition dealer pays nothing on rent from an unregistered landlord. But composition has its own limits and costs, such as no input credit, a bill of supply instead of a tax invoice, and restrictions on inter-state sales. Do not switch schemes only because of rent. Compare the full picture in GST composition scheme for small retailers, with the law in CGST Act, section 10.

Keeping the rent trail with your daily books

Record rent every month like any other shop expense, with the agreement amount, the payment date and the mode. In RichPOS you can enter rent under its own expense category in Expenses and pull the Expense report for any period, so your CA has the monthly rent register ready. RichPOS does not create RCM self-invoices or file GSTR-3B. Those are done on the GST portal or by your CA. More on this: how to track daily shop expenses.

RichPOS is free for 30 days, then ₹99/month for the first 3 months and ₹199/month after that.

Checked on 21 October 2026 against Notification 13/2017-Central Tax (Rate) as amended by Notifications 09/2024 and 07/2025, the 22 October 2024 corrigendum, CGST section 13(3), section 31(3)(f) and (g), Rule 47A and Circular 211/5/2024-GST. This is general information, not tax advice. Rent paid in advance, security deposits, mixed-use property and past periods need your CA's view.