Commercial Contracts

Commercial Lease / Leave & Licence

Registration and stamping are not formalities. An unregistered lease for a term above the threshold is inadmissible to prove its own terms, which means the carefully negotiated clauses become unavailable at exactly the moment they are needed.

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Commercial Lease Deed

Lease of commercial premises — to be stamped and registered

This Lease Deed (this "Deed") is made at [PLACE OF EXECUTION] on [DATE].

BY AND BETWEEN

[LESSOR NAME], [CONSTITUTION — son/daughter of ______, aged ______, PAN ______ / a company bearing CIN ______], residing at or having its registered office at [ADDRESS] (the "Lessor", which expression includes heirs, executors, administrators, successors and permitted assigns) of the ONE PART;

AND

[LESSEE NAME], a company incorporated under the Companies Act, 2013 bearing CIN [CIN] and PAN [PAN], having its registered office at [REGISTERED OFFICE ADDRESS] (the "Lessee", which expression includes its successors and permitted assigns) of the OTHER PART.

Recitals

A.The Lessor is the absolute and lawful owner of, and is seized and possessed of and otherwise well and sufficiently entitled to, the premises described in Schedule I (the "Premises"), free from all encumbrances, charges, liens, litigation and claims.

B.The Lessor’s title to the Premises is derived from [DESCRIBE TITLE — e.g. sale deed dated ______ registered as document no. ______ with the Sub-Registrar of ______].

C.The Lessee has approached the Lessor for a lease of the Premises for use as [PERMITTED USE — e.g. corporate office], and the Lessor has agreed to grant such lease on the terms recorded below.

D.The Lessee has inspected the Premises and satisfied itself as to their condition, area, title, approvals and fitness for the Permitted Use.

NOW THIS DEED WITNESSETH as follows:

1. Demise and term

1.1In consideration of the rent reserved and the covenants contained in this Deed, the Lessor grants and demises to the Lessee, and the Lessee takes on lease, the Premises more particularly described in Schedule I, together with the fixtures and fittings listed in Schedule II and the right to use the common areas, parking spaces and amenities specified in Schedule I.

1.2The lease is for a term of [TERM — e.g. five (5) years] commencing on [COMMENCEMENT DATE] and expiring on [EXPIRY DATE] (the "Term"), unless determined earlier in accordance with this Deed.

1.3The Lessee shall have a lock-in period of [LOCK-IN — e.g. thirty-six (36) months] from the Commencement Date, during which neither Party may terminate the lease except for breach under Clause 15. ~The term, lock-in and any renewal option are commercial decisions — specify.~

1.4The Lessee shall have the option to renew the lease for a further term of [RENEWAL TERM] on the same terms save as to rent, which shall be increased by [PERCENTAGE] per cent over the rent payable in the last month of the expiring Term, exercisable by written notice given not less than [NUMBER] months before expiry. Renewal shall be recorded by a fresh registered instrument at the Lessee’s cost.

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12 more pages in the Word file

Preview of the first page. Highlighted fields are the ones you fill in — they appear the same way in Word. Scroll the preview to read on; the full document runs to 13 pages.

Notes for use

These notes accompany the template and explain the drafting choices, the compliance points and the mistakes most often made with this document. They appear as a final page in the Word file, intended to be deleted before the document is executed.

Registration is not optional

Section 107 of the Transfer of Property Act, 1882 requires a lease from year to year, for a term exceeding one year, or reserving a yearly rent, to be made by a registered instrument, and Section 17(1)(d) of the Registration Act, 1908 makes such a lease compulsorily registrable. An unregistered lease of this kind is not admissible in evidence to prove the terms of the tenancy, which in practice means the tenant may be treated as a monthly tenant. The common workaround of an eleven-month unregistered agreement is a genuine option for short arrangements, but it gives the lessee no security of tenure and no enforceable lock-in.

Stamp duty is State-specific and material

Stamp duty on leases is generally computed on a formula combining rent, term, security deposit and any premium, and differs substantially between States. Duty on a five-year commercial lease can run into lakhs. Get the figure from the jurisdictional Sub-Registrar or a local advocate before you agree who bears it — Clause 17.2 is often signed without either side knowing the number.

TDS on rent

From 1 April 2026 deduction is under Section 393 of the Income-tax Act, 2025, in the table entry that replaced Section 194-I. The rate differs between plant and machinery and land, building and furniture, and the monthly threshold has become significant in practice. Quote the new payment code, not "194-I", on the challan and the quarterly return. Confirm the current rate and threshold with your chartered accountant.

GST on commercial rent

Renting of commercial immovable property is a taxable supply. Where the landlord is unregistered and the tenant is registered, the tax has been placed on the tenant under reverse charge, with subsequent amendments affecting composition taxpayers. This position has moved more than once — verify the notification in force on the date of the lease rather than relying on Clause 2.5 alone.

Mortgagee no-objection

Clause 8.1(c) matters more than it looks. If the property is mortgaged and the lender has not consented, the lease may not bind the lender on enforcement, and the tenant can be dispossessed despite a registered lease. Ask for the encumbrance certificate and the lender NOC before paying the deposit.

Security deposit protection

Deposit recovery is the single most common commercial lease dispute in India. Clause 3.4 gives the lessee a right to remain in occupation rent-free until refund, which is a far more effective lever than a damages claim. Lessors will resist it; lessees should hold the line, or at minimum secure the right to adjust the final months’ rent under Clause 3.2.

Lock-in works both ways

Clause 1.3 binds both Parties. Lessees should check that the lock-in is mutual and that Clauses 12, 13 and 15 carve out termination for damage, force majeure and lessor default, as drafted here. A one-sided lock-in binding only the lessee is common and should be negotiated.

Do not permit self-help eviction

Clause 15.4 is deliberate. Locking premises or cutting utilities without due process exposes the lessor to criminal and civil consequences and usually destroys its position in any subsequent proceeding.

Area definitions

Record carpet, built-up and chargeable area separately in Schedule I, and state which one the rent is computed on. Disputes about loading factor are avoidable and are entirely a drafting failure.

Execution formalities

Execute in the required number of originals, on stamp paper of the correct value purchased in the correct State, with two witnesses, and present for registration within four months of execution. Delay attracts penalty; beyond eight months registration requires the Registrar’s condonation.

Current as of

Reflects Indian law current as of {{DATE OF USE}}. Stamp duty, registration fees and GST treatment vary by State and change frequently — verify your State’s position before executing.

This is a ready-to-use template provided for convenience. Laws and requirements change, and every situation is different — please have it reviewed by a qualified professional (a lawyer, company secretary, or chartered accountant as relevant) before you rely on it.