SAC Code for Rent and Leasing Services

If you are hunting for a rent HSN code, the short answer is that one does not exist — rent is a service, and services are classified under Service Accounting Codes, not HSN. Renting of immovable property sits under SAC heading 9972 (real estate services), and leasing or renting of goods, plant and equipment sits under SAC heading 9973. Everything else about GST on rent — whether it is exempt, who pays it, and whether you can claim it back — follows from which of those two headings your arrangement falls into and what is actually being let out.

There is no HSN code for rent — you need a SAC

HSN — the Harmonised System of Nomenclature — classifies goods. It is a global standard, and India adopted it for GST so that a bolt or a bag of cement carries the same code here as it does elsewhere. Services never had an equivalent, so GST uses a separate scheme: the Service Accounting Code, a six-digit number that always starts with 99, followed by a two-digit heading, a one-digit group and a one-digit service code. That is why "rent HSN code" returns confusing results — the field on your invoice is usually labelled "HSN/SAC", and for a rental invoice it is the SAC half of that label that applies.

The structure is worth understanding because it tells you how much precision you need. 9972 is the heading, 99721 is the group, and 997212 is the specific service. Your invoice and your GSTR-1 HSN summary need the six-digit code; a four-digit heading is only acceptable where the turnover-based reporting rules allow it. If you are new to the two systems, our explainers on how HSN codes work and the SAC code list for services cover the numbering scheme in more detail.

SAC 9972: real estate services

Heading 9972 covers services relating to immovable property — land, buildings and anything permanently attached to them. It splits broadly into two groups: services where you are letting out property you own or have leased, and services you perform on someone else's property for a fee or commission.

The distinction that matters most in practice is 997211 versus 997212. It is not about who the tenant is or what they do inside — it is about the character of the property itself. A flat let to a company for its employees to live in is still residential property; a converted ground-floor room let as a shop is not. Get this wrong and the exemption analysis in the next section falls apart, because the residential-dwelling exemption is written around the nature of the dwelling and the use it is put to.

SAC 9973: leasing and rental services

Heading 9973 is "leasing or rental services with or without operator", and it covers movable assets and rights rather than land and buildings. Equipment hire, vehicle leasing, machinery on rent, IT hardware rentals and licensing of intellectual property all live here.

Two mechanics are worth knowing before you price a 9973 supply. First, "with or without operator" is a real fork: hiring out a crane with your own driver is a materially different supply from handing over the crane keys, and the codes distinguish them. Second, the rate on leasing goods is generally linked to the rate that would apply to an outright sale of the same goods — the rate entries for leasing and rental services typically read "same rate of central tax as applicable on supply of like goods involving transfer of title". So when the GST 2.0 rate slabs moved in September 2025, the rate on leasing many of those goods moved with them. Do not assume a lease you priced in 2024 still carries the same rate today.

Residential letting versus commercial letting

This is where most of the confusion around GST on rent comes from, so it is worth separating the two limbs cleanly.

Commercial property

Renting out immovable property for commercial use is a taxable supply of services at the standard rate. A landlord letting shops or office space is making a taxable supply, must register once their turnover crosses the threshold for services, and issues a tax invoice with GST on top of the agreed rent. The rental income counts towards aggregate turnover, which catches out a lot of individuals who own one commercial unit and think of the rent as passive income rather than a business supply.

Residential dwelling

Renting a residential dwelling for use as a residence is exempt — that entry has been in the exemption notification since 2017 and is the reason ordinary house rent carries no GST. But the exemption was narrowed in July 2022: where the tenant is a person registered under GST, the supply no longer sits quietly in the exemption, and the tax is payable by the tenant under reverse charge instead. A further amendment with effect from 1 January 2023 carved out the case of a proprietor who takes a residential dwelling in a personal capacity for use as their own residence, so that a sole proprietor renting their own home is not dragged into reverse charge simply because their business is registered.

Reverse charge on renting of immovable property

There are now two distinct reverse-charge situations around rent, and mixing them up is a common source of short payment.

1. Residential dwelling let to a registered person. In force since 18 July 2022. The tenant, being registered, discharges the tax under reverse charge rather than the landlord charging it. The 1 January 2023 amendment excludes a proprietor renting in a personal capacity for their own residence.
2. Commercial property let by an unregistered landlord to a registered person. Introduced with effect from 10 October 2024, this covers the gap where a small, unregistered landlord lets commercial space to a registered business — the registered tenant pays the tax under reverse charge. A subsequent clarification dealt with taxpayers under the composition scheme, so if you are a composition dealer paying commercial rent, confirm the current position specifically.

Reverse charge is not a discount. You raise a self-invoice, pay the tax in cash through your electronic cash ledger — reverse-charge liability cannot be set off against credit — and then claim the credit separately if you are otherwise eligible. Our guide to the reverse charge mechanism under GST covers the self-invoice and payment mechanics in full.

Input tax credit on rent you pay

Rent on premises used for your business is one of the cleaner credits in GST. The block on construction credit applies to constructing immovable property on your own account — it does not extend to occupying premises someone else built and letting you use. So GST charged by your landlord on office, warehouse or shop rent is ordinary input tax credit, subject to the standard section 16 conditions:

• You hold a valid tax invoice from the landlord, showing their GSTIN and the correct SAC.
• The supply has actually been received — you have occupancy for the period billed.
• The credit appears in your GSTR-2B, which means the landlord has reported the invoice in their GSTR-1.
• You pay the landlord within the prescribed period, or the credit is liable to be reversed with interest.

Two situations need more care. Rent on premises used partly for exempt supplies or partly for personal use has to be apportioned under the common-credit rules. And residential accommodation taken for employees is not automatically creditable even where you have paid reverse charge on it — whether it is a business expense or a personal benefit to the employee is the question, and the answer depends on the arrangement. The general eligibility framework is set out in our input tax credit rules guide.

Invoicing, place of supply and the errors that bite

For renting of immovable property, the place of supply is the location of the property. Not the landlord's registered address, not the tenant's head office — the building. That has consequences a lot of landlords discover late:

• If the property is in Maharashtra, the supply is intra-state Maharashtra and attracts CGST plus SGST, even if landlord and tenant are both headquartered in Karnataka.
• A tenant registered in a different state cannot claim CGST/SGST charged in the property's state against their own registration. This is the single most expensive rent-related mistake we see — the credit is simply stranded.
• Landlords who own property in several states may need registration in each of those states, because the supply is being made from the location of each property.

On the invoice itself, put the six-digit SAC in the HSN/SAC column, describe the period being billed, and keep maintenance charges, common-area charges and electricity reimbursements clearly identified — whether those are part of the rental supply or separate supplies affects the value on which you charge tax. Where the tax is payable under reverse charge, the invoice must say so, and the amount does not go into your own output tax.

Verify the landlord GSTIN before you claim the credit

Rent is usually the second or third largest recurring line in a small company's expense ledger, and it is paid to the same counterparty every month for years. That combination — high value, long horizon, no fresh due diligence after the lease is signed — is exactly where GSTIN problems accumulate quietly. A landlord who cancels a registration, gets suspended, or whose registration is struck off keeps sending the same invoice template with the same GSTIN on it, and nothing in your accounts payable process notices.

The fix is to check the landlord's GSTIN when the lease starts and to re-check it periodically thereafter, alongside the rest of your vendor master. A single lookup returns the legal name, registration status and date, taxpayer type and principal place of business, which is enough to confirm that the entity on the invoice is the entity that is registered and that the registration is still active:

curl -H "x-api-key: YOUR_API_KEY" \
  https://gstinapi.com/api/get-taxpayer-info/27AAACR5055K1Z7

If you would rather check one number by hand, the GST number search tool does the same lookup in the browser. For a rent ledger with dozens of landlords across locations, wiring the check into a scheduled job is more realistic — see automated vendor GSTIN monitoring for the pattern. Verification tells you the counterparty is real and active; it does not tell you they have filed their GSTR-1, so keep reconciling the rent credit against your GSTR-2B each month as well.

Frequently asked questions