Overview
A commercial lease sets out how a business occupies premises: the rent, the deposit, the period, the permitted use, the fit-out, the exit and everything that can go wrong in between. Because commercial leases run for years and carry significant sums, their wording matters more than for a short residential agreement.
Leases of more than one year must be registered, and stamp duty depends on the state, the rent and the term. GST applies on commercial rent where the landlord is registered, and the tenant, if a business, usually has to deduct tax on rent above the threshold. Both should be addressed explicitly in the agreement.
We draft the lease for either side, or review a draft from the other party and explain the clauses that deserve negotiation. For legally complex properties or very large leases, we recommend a lawyer for the title and enforceability aspects, and we work with them where needed.
Who should use this?
It suits any business taking or letting commercial space for more than a short period.
Usually a good fit if
- You are setting up an office, shop, clinic, warehouse or co-working space.
- You are a landlord letting commercial property and want protective clauses.
- You have received a landlord's draft and want a second opinion before signing.
- You need the lease to support GST registration, a company's registered office or a bank loan.
Think twice if
- The property has title or approval problems; get those resolved or advised on by a property lawyer first.
- The lease is a very large or complex transaction, such as a built-to-suit warehouse; a lawyer should lead.
Key benefits
Predictable costs
Rent, escalation, deposit and maintenance are fixed upfront.
Exit options
Lock-in and notice terms are balanced and clear.
Fit-out protection
Rent-free period and restoration terms are agreed in writing.
Compliance ready
The lease supports GST registration, registered office and audits.
Dispute prevention
Clear clauses on use, subletting and repairs reduce friction.
Tax awareness
GST and tax deduction on rent are addressed in the terms.
What we need from you
We need both the commercial terms and the property papers.
The parties
- PAN and Aadhaar of the landlord and tenant, or company documents and authorised signatory
- GST registration details, if any
- Bank details for rent payments
The property
- Ownership documents such as sale deed or title papers
- Property tax and electricity bills
- Occupancy certificate or relevant approvals, where applicable
- Floor plan or description of the area let
The commercial terms
- Rent, escalation and deposit
- Lease term, lock-in and renewal options
- Rent-free or fit-out period
- Permitted use, maintenance charges and who pays utilities
- Subletting and exit terms
How the process works
Understand the deal 1 day
We ask about use, term, budget and the points that matter most to you.
Review property papers 1 to 3 days
We read the title and approval documents for obvious gaps and tell you what to verify further.
Draft or review the lease 2 to 4 days
We prepare a draft, or mark up the other side's draft with comments.
Negotiate and finalise 2 to 7 days
Points are discussed with the other side until both parties agree the final text.
Stamp and register 1 to 7 days
The lease is stamped and registered at the sub-registrar office where required.
Post-signing set-up Ongoing
GST, rent payment schedule and tax deduction are set up in your books.
How long it takes
| First draft or review | 3 to 7 days |
| Negotiation | Depends on the other side |
| Stamping and registration | 1 to 7 days |
Timing depends on how quickly the parties agree and on registrar availability.
After you sign
The lease creates continuing obligations on both sides.
- Pay rent and GST on timeMissed payments can trigger default clauses.
- Deduct tax on rentTenants who are businesses should deduct and deposit tax above the threshold.
- Track the escalationApply increases on the agreed date and in the agreed way.
- Keep notice datesCalendar the lock-in end and the renewal or exit notice.
- Record the handoverPhotograph and list the condition of the premises at the start and the end.
Points to settle in a commercial lease
| Point | Why it matters | Typical approach |
|---|---|---|
| Term and lock-in | Sets cost of exit | Balanced lock-in with notice for early exit |
| Escalation | Controls rent growth | Fixed percentage at set intervals |
| Fit-out period | Time to build before paying rent | A rent-free or reduced-rent window |
| Deposit | Landlord's security | Fixed number of months of rent, refundable |
| Permitted use | Avoids disputes over activity | Defined business use and licences |
| Exit and restoration | Cost at the end | Clear handover condition and timeline |
Frequently asked questions
Must a commercial lease be registered?
A lease of more than one year must be registered under the Registration Act. An unregistered long lease may not be accepted as evidence of its terms.
What is a lock-in period?
A period during which neither side can terminate without a penalty. It protects the landlord's income and the tenant's investment in the fit-out.
Is GST payable on rent?
GST is generally payable on commercial rent when the landlord is registered, and the tenant can usually claim input credit if registered. The details depend on the facts.
Who pays stamp duty?
It is agreed between the parties. Many leases split it equally, but the lease should say.
Can I sublet the premises?
Only if the lease allows it. Many landlords restrict or prohibit it, so it should be negotiated at the start.
What if the landlord wants to increase the rent mid-term?
It should be controlled by the escalation clause. Without one, increases need your agreement.
This page is general information to help you prepare, not legal, tax or professional advice for your situation. Rules, forms, thresholds and due dates change, so we confirm the current position before we file anything for you. Taxswami Consultants is an independent professional services firm and is not a government body.