Room Rent HSN Code: Complete Guide for Beginners: 1 Minute to Crack HSN Codes for Room Rent & Save Time

If you're new to renting out rooms or managing a rental property in India, you may have come across the term "HSN Code" and wondered how it relates to room rent and GST (Goods and Services Tax). The HSN (Harmonized System of Nomenclature) Code is a globally recognized system for classifying goods and services, crucial for GST compliance. This guide will walk beginners through the essentials: what HSN Code is, whether it's required for room rent, the relevant exemptions, and practical tips for both landlords and renters.

Understanding HSN Code for Room Rent

Typically, HSN Codes apply to goods, while SAC (Services Accounting Codes) are used for services. Renting out residential properties for use as residence is classified as a service, and under GST, room rent falls under the SAC system, not HSN. The SAC code relevant for renting of residential property is 997211, which covers "Rental or leasing services involving own or leased residential property." Importantly, as per GST rules, renting of residential property for residential use is exempt from GST, meaning you do not need to charge GST or use an HSN/SAC code for residential room rentals.

However, if you are renting out commercial property, the scenario changes—GST applies, and the appropriate HSN/SAC code should be mentioned on invoices and GST returns. Always check the intended use and relevant notifications or consult a tax professional if your rental situation is complex (such as mixed-use properties).

Is Room Rent Taxable Under GST?

Residential room rent for residential use: NOT taxable under GST—no HSN/SAC code required.

Commercial property rent or residential rent for business: Taxable under GST—use SAC 997212 or applicable code.

From a design perspective, when organizing your rental documentation or designing invoices, clearly distinguish between residential and commercial categories. Leveraging digital tools such as a Room Planner can help you document property usage, layouts, and tenant arrangements, making compliance and lease management much more efficient.

Tips 1:

To avoid confusion, always state the "purpose of tenancy" in your rental agreement—whether the room/property is for residential or commercial purposes. This will help ensure you adhere to proper GST laws and avoid unnecessary tax complications or disputes down the road.

FAQ

Q: What is the HSN Code for residential room rent?

A: HSN Codes are for goods; for rental services, the SAC code 997211 is used for residential property, but residential rent is usually exempt from GST in India.

Q: Do I need to charge GST on room rent if I'm renting to students?

A: If the property is used for residential purposes, such as student accommodation, GST is not applicable.

Q: Is GST registration needed if I only rent out a single residential room?

A: No, if you only rent out for residential purposes, GST registration is not required regardless of the number of rooms.

Q: What if I rent a residential property to a company for use as a guesthouse?

A: If the property is used for business purposes (like a guesthouse for employees), GST may apply—confirm with a tax professional.

Q: Where do I mention the SAC or HSN code in my rental invoices?

A: Mention the SAC code (997211 for residential) only if GST is applicable. For exempt rentals, no SAC code is necessary on invoices.