The GST Rent Scam: How Fake Tenants Register Bogus GST at Your Address (and How to Block It)

You rented out your flat in India. The tenant paid the deposit and a few months of rent, then vanished. Months later a GST notice lands at your address for a business you have never heard of, and you are the absentee owner fighting it from another time zone.

This is the GST rent scam. It targets NRI landlords because you are far away, you rarely inspect the property, and the gap between a fraud happening and you noticing it can run a full year. The mechanics are simple. The paperwork that enables it is paperwork you signed. The controls that stop it cost you nothing but attention.

How the scam works

A fraudster signs a normal rent agreement, pays the deposit and one or two months of rent to look real, and takes possession. In those few weeks he registers a GST number using your property as the principal place of business. Then he vacates. Often he does not even ask for the deposit back. The deposit was the price of a verified business address.

On the GST portal, registering against a rented address needs two things: proof you occupy the premises (the rent agreement) and, where there is no valid agreement, a consent letter or NOC from the owner. The consent letter carries the owner's name, the property address, and ownership proof such as an electricity bill or property-tax receipt. Per ClearTax's documentation of the requirement, there is no prescribed format: any written document the owner signs can serve as the consent. That looseness is the hole. A tenant who holds your rent agreement, or who can produce a plausible NOC, has most of what the portal asks for.

Once registered, the fake firm runs invoices, claims input tax credit, and disappears. The liabilities stack against the registered address. The notices follow the address. That address is yours.

What you are exposed to

Two layers. Keep them separate, because owners and headlines mix them up.

On property-tax reclassification. A municipal assessor who sees a business in the public GST record at your home can move to reclassify the property from residential to commercial, which raises the annual property-tax bill. Treat the size of that increase as a publisher estimate from 66 MG Road, not settled law. We put the commercial-rate jump at roughly two to three times the residential bill, based on the spread between residential and commercial slabs in the metros we operate in. Slabs are set by each municipal body, so the multiplier varies by city and is not a national rule. The risk direction is real. The exact number is not a statute you can cite.

The state has tightened the front door. Rule 25 of the CGST Rules, substituted by Notification 38/2023-CT, allows physical verification of the premises with photographs in FORM GST REG-30 where Aadhaar authentication fails or risk flags fire, and now permits it in high-risk cases even where Aadhaar is authenticated. Biometric Aadhaar authentication came in through Rule 8 amendments. These help. They do not replace your own controls. A registration can still go through before any officer walks the property.

How to block it before you sign

Control the NOC and the consent letter

The consent letter is the instrument the fraud rides on. Treat it like a cheque.

Put the right clauses in the agreement

The agreement is your strongest paper. Three clauses, named and explicit:

Tax authorities are moving the same direction. TaxGuru's note on preventing fraudulent registrations covers an Assam circular that bars GST registration unless the applicant furnishes a rent agreement registered with the Sub-Registrar. Register your agreement and notarise it on stamp paper so it stands up later.

Verify the tenant, on paper, at the police station

File the tenant verification form at the local police station. Cross-check ID against the person in front of your manager. A fraudster who knows a verification form is going in often walks away. This is also the NRI scams playbook for every other fraud aimed at absentee owners, and it works here for the same reason: friction at the front door.

How to catch it after the fact

Detection is a quarterly habit, not a one-time check.

Run the search every quarter. The whole point of the scam is the time lag. Close the lag and the scam loses its room to run.

The other GST question: is GST payable on rent at all?

Many people who land on this page are not chasing a scam. They are asking a simpler question, from one of two sides. The owner wants to know whether GST applies to the rent coming in. The tenant has just been handed an invoice with 18% added to it and wants to know whether the landlord is allowed to do that.

Both answers come out of the same three rules. Here they are, with the notifications.

Renting a home to a person who is not GST-registered: no GST

Entry 12 of Notification No. 12/2017-Central Tax (Rate) dated 28 June 2017 exempts "services by way of renting of residential dwelling for use as residence." A flat let to a family, a student or a working individual who holds no GSTIN carries no GST. It does not matter how high the rent is, and it does not matter whether the landlord is registered under GST for something else.

This is the ordinary NRI landlord case. Flat in Bangalore, tenant is a salaried couple, rent is ₹60,000 a month. No GST. Nothing to file.

Renting a home to a GST-registered person: 18%, paid by the tenant

From 18 July 2022, entry 5AA of Notification No. 13/2017-Central Tax (Rate) (inserted by Notification No. 05/2022-Central Tax (Rate)) puts renting of a residential dwelling by any person to a registered person under the reverse charge mechanism. The rate is 18%. The tenant pays it to the government, not to you.

Read the two operative words. Any person: your own registration status is irrelevant, and you do not have to register because of this. Reverse charge: the liability sits with the registered tenant. A landlord who adds 18% to a residential rent invoice and collects it has the mechanism backwards.

From 1 January 2023, a carve-out narrows this. Where the registered person is the proprietor of a proprietorship concern and takes the residential dwelling on rent in his personal capacity, for his own residence and on his own account rather than the concern's, reverse charge does not apply. The test that decides it is not what the lease says. It is whether the rent is being claimed as a business expense or reimbursed by the firm. If it is, the transaction is a business one and reverse charge applies.

Renting commercial property: GST applies, and since October 2024 the tenant may be the one paying

Commercial letting has never been exempt. Shops, offices, warehouses and godowns attract 18% GST. The landlord charges and pays it under forward charge once registered, and registration follows the ordinary services threshold of ₹20 lakh of aggregate turnover in a financial year (₹10 lakh in the special category States).

From 10 October 2024, entry 5AB of Notification No. 13/2017-Central Tax (Rate) added reverse charge where an unregistered person lets commercial immovable property to a registered person. A CBIC corrigendum dated 22 October 2024 confirmed the entry covers immovable property. An NRI who owns one shop, stays under the threshold and lets it to a registered firm therefore does not register: the tenant discharges the GST.

If you are the tenant and your landlord is charging you GST

Ask three questions in order.

  1. Is the property residential and are you unregistered? Then no GST is due from anyone, and an invoice charging it is wrong. Ask for it to be corrected.
  2. Is the property residential and are you GST-registered? Then 18% is due, but under reverse charge. You pay it to the government and claim input credit where eligible. You do not pay it to the landlord. A landlord collecting it from you is collecting money he has no authority to collect.
  3. Is the property commercial? Then GST is genuinely payable. If the landlord is charging it, ask for his GSTIN and a tax invoice showing it, then verify the GSTIN on the Search Taxpayer page at gst.gov.in. A number that does not resolve, or resolves to a different name, is the point at which this stops being a billing question.

That last case is where the two halves of this page meet. A landlord charging GST without a valid registration, and a tenant registering a business at an address he was never authorised to use, are the same fraud pointed in opposite directions. The defence in both is the same: get the GSTIN, search it, and keep the record.

None of the above is tax advice for your specific facts. Rates and notifications change; confirm with a chartered accountant before you invoice, pay or refuse to pay.

FAQ

Is GST payable on residential rent in India? Not when the tenant is not registered under GST. Entry 12 of Notification No. 12/2017-Central Tax (Rate) exempts renting of a residential dwelling for use as a residence, at any rent level. Where the tenant is a GST-registered person, 18% applies under reverse charge from 18 July 2022, and the tenant pays it to the government, not to the landlord. A registered proprietor renting a home in his personal capacity for his own residence is outside that charge from 1 January 2023.

My landlord is charging me GST on my flat. Is that allowed? On a residential flat, no. If you are unregistered, no GST is due at all. If you are registered, the 18% is due under reverse charge, which means you pay it to the government yourself and not to your landlord. On commercial premises GST is genuinely payable, so ask for the landlord's GSTIN and a tax invoice, and verify the number on the Search Taxpayer page at gst.gov.in before you pay.

Do I have to register for GST as an NRI landlord? Not for residential rent. The exemption and the reverse-charge entry between them mean the residential landlord has nothing to register for or file. For commercial rent, registration follows the ordinary threshold of ₹20 lakh of aggregate turnover (₹10 lakh in special category States), and since 10 October 2024 an unregistered landlord letting commercial property to a registered tenant does not need to register at all, because the tenant pays under reverse charge. Confirm your own position with a CA, since a non-resident's facts can differ.

Can a tenant register a GST number at my rented property? Yes. A tenant can register a GSTIN against your address using a rent agreement, or a consent letter/NOC where there is no valid agreement, plus your ownership proof such as an electricity bill. The GST portal does not call you to confirm. This is why a no-GST-registration-without-written-consent clause and control of your NOC matter before you hand over keys.

What is the GST rent scam in India? A fraudster rents your property, pays a deposit and short rent to look genuine, registers a bogus GST number at your address, runs fake invoices to claim input tax credit, then vacates. The liabilities and notices stack against your address. The absentee NRI owner finds out months later and spends years proving the registration was never theirs.

How do I stop a tenant from misusing my address for GST? Control your documents and your agreement. Never give a blank NOC, keep ownership proofs out of the tenant's hands, and add a clause barring any GST registration at the address without your written, business-specific consent. File a police tenant verification, notarise the registered agreement, and search your address on the GST portal every quarter.

What clause protects a landlord from GST fraud by a tenant? Three, working together. A no-GST-registration-without-written-consent clause makes any registration a breach. A liability clause puts all tax exposure from address misuse on the tenant. An indemnity clause makes the tenant repay your penalties and legal costs. Name them, register the agreement, and notarise it on stamp paper so they hold up.

Talk to someone who walks the property

The GST rent scam works on absence. 66 MG Road closes the gap. One vetted manager per property, not a rotating call centre. Dated photo proof of who is in your flat and what the premises look like. Verified tenants with police verification on file. Itemised billing, rent paid to your NRO account, and a quarterly GST search on your address so a bogus registration surfaces in weeks, not years. We operate in Mumbai, Pune, Bangalore, Hyderabad, Chennai, and Gurgaon. See how we work or read a sample report. For the wider set of frauds aimed at absentee owners, start with our guide to NRI property scams in India and managing tenants from abroad.

Saurabh Garg, founder, 66 MG Road

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