Shop Rent Agreement Format
Draft a rent agreement for a shop, office or godown, with the business to be run, licences, GST on rent, lock-in and notice, ready for stamp paper.
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Renting out a shop, office or godown
A shop or office rental needs a few things a house rental doesn't. The agreement should say what business will run there, who gets the trade licence and other registrations, how GST on the rent is handled, and how long both sides are committed. This page opens the commercial format, which keeps the standard clauses on rent, deposit, bills, repairs and handover, and adds these business ones.
Clauses specific to commercial premises
| Clause | What it says |
|---|---|
| Use | The premises are used only for the business you name (for example "a retail garment shop") and for no other purpose |
| Licences | The tenant gets, at its own cost, any licence or registration needed to run the business, and follows local rules |
| GST | GST on rent, if applicable, is paid by the tenant on top of the rent, is included in the rent, or is left out |
| Lock-in | Neither side can end the agreement during the lock-in, except for a breach |
| Rent increase | A percentage increase on renewal, and after every 12 months if the term is longer than a year |
Pets and the residential-use clause are left out of this format, since they don't apply to a shop.
Filling it in
- Parties. If the tenant is a firm or company, write its name with the person signing, such as "Sharma Traders, through its proprietor Rakesh Sharma". Add the firm's PAN in the ID field if you like.
- Premises. Describe the space ("a ground-floor shop of about 200 sq ft") and the full address, including the shop number and market name.
- Term and money. Commercial terms are often longer than 11 months. If you choose a longer term, read the registration note below.
- Business and GST. Name the business and choose how GST is handled. Ask your accountant whether GST applies to your rent.
- Lock-in and notice. A lock-in protects the landlord's income and the tenant's fit-out investment. Set the notice period that applies after it.
- Annexure. List fittings handed over, such as shutters, lights, AC units or counters.
Registration and stamp duty
Under section 17(1)(d) of the Registration Act, 1908, a lease from year to year, for any term exceeding one year, or reserving a yearly rent must be registered. Many commercial leases run for three, five or nine years and are registered at the sub-registrar's office, while shorter ones often use 11 months. Stamp duty is set by each state and usually depends on the rent, deposit and term. This tool doesn't calculate it, so check with your state's registration and stamps department or a lawyer.
Good practice
- Agree in writing who pays for signage, fit-out work and restoring the space when the tenant leaves; add it under "Your own clauses".
- Record the electricity meter reading and the condition of the shutter and fittings on the first day.
- Collect rent by bank transfer so both sides have a record for accounts and tax.
This is a draft format, not legal advice; have a lawyer check a long commercial lease. Nothing you type leaves your browser.
Other rent agreement formats
Need more options? Open the full Rent Agreement Format Generator.
Frequently asked questions
How is a shop rent agreement different from a house rent agreement?
It names the business to be run, limits the use to that business, makes the tenant responsible for business licences and registrations, and usually deals with GST on rent. Lock-in periods are also more common for shops and offices.
Is GST payable on shop rent?
Renting commercial property can attract GST depending on the landlord's registration and turnover. The agreement can say GST, if applicable, is paid by the tenant on top of the rent, is included in the rent, or leave it out. Ask your accountant which applies.
Can a firm or company be the tenant?
Yes. Write the firm's name with the person signing for it, for example 'Sharma Traders, through its proprietor Rakesh Sharma' or 'XYZ Pvt. Ltd., through its director …'.
Does a commercial rent agreement need registration?
Under the Registration Act, 1908, leases from year to year, for more than one year or reserving a yearly rent must be registered, and states add their own rules. Longer commercial leases are often registered. Check your state's rules.