Non-Residential Property

A non-residential property refers to real estate intended for commercial use rather than for living purposes. This category covers establishments such as office spaces, retail units, manufacturing facilities, warehouses, hotels, medical centers, and other business-related buildings. These properties often come under separate zoning and regulatory guidelines, and although they typically generate higher rental income, they also tend to incur greater utility charges and higher municipal taxes.

In India, income from leasing such property is taxed under the “Income from House Property” head, and the owner is allowed a standard deduction of 30% on the taxable amount. Commercial rent is also subject to 18% GST, which does not apply to residential leasing. When the property is sold, capital gains tax is levied based on the period of ownership.

Example:

Suppose someone rents out a commercial shop for ₹50,000 a month. The taxable income is calculated after applying the 30% standard deduction, and the tenant may be liable to pay GST at 18%. If the owner sells the shop after holding it for more than three years, the profit would fall under long-term capital gains taxation.