Nikhil's life crossed three GST minefields at once: his shop is regular GST. He freelances services to a US client. And he started renting his second flat to a small company. Three different rule sets — and most CAs only mention one.
Here's all three, in one place.
- Rent — residential to individuals: exempt. Commercial: 18% (landlord charges; or RCM if landlord unregistered and tenant is registered company since Jul 2022).
- Services within India: 18% default; some essential services 5/12%.
- Service exports: zero-rated. Use LUT to bill at 0%.
- OIDAR digital exports to consumers: special rules — registration in destination country may apply.
GST on rent — the 3 sub-cases
Residential to individual
The easy case
Exempt. No GST. No registration needed (for this income).
Commercial / shop
Standard rate
18% GST. Landlord charges if registered. If landlord unregistered + tenant is a GST-registered company → RCM (tenant pays).
Residential to business
RCM applies
Residential let to a registered GST entity → tenant pays GST under RCM. Landlord doesn't charge.
GST on services — the basics
👉 Default rate: 18%. Most professional, consulting, IT, marketing services.
👉 5% / 12%: essential services — transport, certain healthcare, hospitality (within slabs).
👉 Place of supply: usually where the recipient is located. Matters for IGST vs CGST/SGST split.
👉 SAC codes: 6-digit Service Accounting Codes — pick the right one (matters for tenders and audits).
Service exports — the zero-rated win
Services to overseas clients qualify as "export of service" if all 5 conditions hold (supplier in India, recipient outside India, place of supply outside India, payment in convertible forex, supplier and recipient not establishments of same person).
Default flow is: pay 18% IGST, then claim refund. Painful. LUT (Letter of Undertaking) lets you bill at 0% directly. One annual filing, no upfront IGST. See our LUT guide.
OIDAR — the cross-border digital trap
OIDAR = Online Information and Database Access or Retrieval. SaaS, downloadable content, online courses, ad services — when sold to consumers (not businesses) abroad.
Treated as export of service → 0% with LUT. Standard.
Still treated as export under Indian GST. But destination country may require VAT/GST registration there (EU VAT, UK VAT, Australia GST, etc).
Foreign supplier must register in India for IGST on the OIDAR service. Common gotcha: many international SaaS platforms now apply Indian GST on B2C invoices to Indian users.
Nikhil's three flows
Special cases trip up small businesses more than the regular ones. A single missed RCM on commercial rent can compound into a ₹2L liability over 3 years.
Quick answers
If your friend is using it as a residence (not business), it's exempt. No GST. No registration needed (for that income alone).
For commercial premises, if you're a GST-registered tenant — yes, you self-pay under RCM at 18%. Add it to your GSTR-3B Table 3.1(d) and claim ITC simultaneously.
Yes — Nepal qualifies as outside India for GST purposes. As long as the 5 export-of-service conditions hold, it's zero-rated.
Likely yes, via the OSS scheme. EU VAT on digital services to consumers kicks in regardless of seller location. Threshold rules apply.
Airbnb (the platform) collects GST and remits under Section 9(5). You may still need GST registration if your total turnover crosses threshold.
When you might want help
Cross-border, OIDAR, RCM, and commercial-rent edge cases are where mid-sized businesses lose money quietly. A 30-minute review catches them before they compound.
Tricky GST scenario?
WhatsApp us the situation. We'll tell you what applies, what to claim, what to avoid. Fixed-fee handling available.