Are you aware that when the principal place of business is marked as 'rented,' a rent agreement is necessary when completing a GST application? Fret not. That's precisely what we are here to help you with. So provide your rental agreement and manage your business with increased ease.  

Let's begin by showing what this Rent Agreement is?

A rental agreement fosters a harmonious landlord-tenant relationship. This agreement also safeguards their rights. It also reveals information about the property's ownership. The landlord/tenant should never accept an oral deal because it is not legally binding and should always insist on signing a written agreement. Another significant advantage of registering a rental agreement is that it acts as an authentic document, protecting both parties from a legal mess. 

Now the question is,

Why do you have to provide a rent agreement for GST registration?

  • When a firm or taxpayer registers under GST and has their business premises rented or leased, the rental agreement must be given or presented along with the other paperwork. 
  • Failure to submit the same will result in the taxpayer receiving a show-cause notice.
  • It should be emphasized that the rental agreement, together with other required documents, must be presented as required by the GST authorities and the legislation. 
  • The rental agreement would also serve as one of the most significant proofs of the business location, assuming it was rented. The type or nature of the premise possessed by the taxpayer to conduct or run the business should be chosen.
  • If the property is declared leased or rented rather than owned or taken on consent, the rental agreement or rent payment slip will serve as the primary documentation proof. However, it is highly recommended that the same be accompanied by a property tax receipt, an electricity bill, a water bill, or a Municipal copy, as this will extend the document's validity.

To provide a rent agreement, you must maintain specific standards and rules. Let's show you:

How to make a GST Rental Agreement?

  • It should be mentioned that the GST Rental Agreement should be printed on stamp paper. The value of stamp paper used for rental agreement will vary by state. If the value of the stamp paper is less than what is required by law, the GST officials will issue or serve a show-cause notice.
  • It is recommended that the electricity bill or a property tax receipt be issued along with the rental agreement so that no show-cause letter is sent to further check the validity of the proof.

Rent Agreement Size

The rent agreement should be in PDF format and not more than 1.9 MB when uploaded or submitted to the GST site.

Format of the Rent Agreement

The following details should be included in the rental agreement format: 

  • It's best to start with the Lessor and Lessee details.
  • The next element should state the rent agreement's purpose.

The rent agreement should also include specific clauses.

  • The lease duration should be the first consideration, usually 11 months.
  • The lease termination notice period and the compensation paid if the lease is terminated prematurely.
  • Separating the two modes used for premises: residential and commercial. If you're registering for GST registration, you must include "commercial purposes" in your application.
  • Tenant's responsibility while returning the property.
  • The tenant is responsible for minor repairs or adjustments that must be done with approval.
  • A security deposit must be made, and conditions must be satisfied before being refunded.
  • Any electricity or water bills, property taxes, or any penalty that must be shared.
  • Any advance deposit or rent to be paid in advance.

It should be emphasized that the GST authorities are taking steps to reduce and prevent the uploading of fictitious rental agreements by business owners or taxpayers, ensuring that the registration received is authentic.

Concluding Remarks:

It is essential to finish the GST registration steps by providing accurate information. The taxpayer must offer or furnish an updated and renewed rental agreement 5for the GST registration. Now, you would have known the details related to the Rent agreement for GST registration in India

Author : Sakshi

Date     : 02-Sep-2022

Frequently Asked Questions

When you select the principal place of business as 'rented,' you have to attach a rent agreement.

As stamp duty is state-specific in India, it should be confirmed according to the case.

Yes, a rent agreement can be submitted as address proof for GST registration, provided that it is the Principal Place of Business.

On a valid and an applicable stamp paper, Rent / Lease Agreement in the Partnership's name is made. The rental/lease must be for commercial purposes. You can also provide any other document that proves the Lessor's ownership of the premises. For instance, the most recent Property Tax Receipt or a copy of the Electricity Bill.

In the case of 'rented' or 'lease' premises, one should attach a rent or lease agreement. A consent letter or NOC works when we select premises as consented.