Commercial Lease Deed – free template

Overview

A Commercial Lease Deed is the document by which the owner of a commercial property (the Lessor) grants a business (the Lessee) the right to occupy and use identified premises for a defined term, in exchange for rent. In India, the core legal framework for leases of immovable property is Chapter V of the Transfer of Property Act, 1882 ("TPA"), which defines a lease as a transfer of a right to enjoy property, and sets out default rules on rent, the rights and liabilities of lessor and lessee, and the modes by which a lease may determine (expiry of term, notice, forfeiture, surrender, merger). Where the deed is silent, the TPA's default provisions apply, so a well-drafted deed should expressly cover the points the parties actually negotiated rather than relying on the statutory defaults. A threshold question for any Indian commercial tenancy is whether a state Rent Control Act applies. Rent control legislation is enacted separately by each state (for example the Maharashtra Rent Control Act 1999, the Delhi Rent Control Act 1958, or equivalents in other states), and coverage is highly fragmented: some Rent Control Acts exclude commercial premises above a specified monthly rent, some exclude commercial premises entirely, and a growing number of states have adopted (in whole or in part) the Model Tenancy Act 2021 framework, which favours freedom of contract and mandatory registration of tenancies. Because this varies state by state and can change the mandatory floor of tenant protection, parties should confirm the position under the law of the state where the premises are located before finalising rent-review, eviction, and renewal clauses, rather than assuming any single state's rule is a national standard. A related distinction commonly misunderstood in Indian commercial real estate is the difference between a lease and a leave-and-license arrangement. A lease under the TPA transfers an interest in the property to the lessee (a right in rem, offering stronger possession rights and, in some states, statutory renewal or protection against eviction), whereas a leave-and-license arrangement (governed by the Indian Easements Act 1882, section 52) grants only a personal permission to use the premises without transferring any interest in the property, and is generally easier for the licensor to terminate. Landlords in jurisdictions with tenant-protective rent control legislation frequently prefer leave-and-license structures for this reason; the label used in the document is not conclusive, and the substance of the rights granted governs how a court will characterise the arrangement. Stamp duty and registration are governed by the Registration Act 1908 at the central level, but stamp duty rates and the specific registration thresholds are fixed by each state's own Stamp Act (or the Indian Stamp Act 1899 as adapted by the state), and vary significantly across India — commonly by reference to the lease term and the annual rent plus deposit. A lease for a term exceeding one year generally requires registration to be admissible as evidence of the term. This document does not state a specific stamp duty percentage because no single rate applies nationally; parties should verify the applicable duty and registration procedure with a local sub-registrar or advocate before execution. Commercial leases commonly include a lock-in period during which neither party may terminate the lease, reflecting the Lessee's fit-out investment and the Lessor's interest in a stable income stream; this is a matter of contract rather than a statutory requirement, and should be drafted with clear consequences for early exit. Other essential terms typically include rent escalation, security deposit and its refund mechanism, permitted use of the premises, maintenance and common-area-maintenance charges, sub-letting restrictions, and the consequences of default. Given the state-specific variation in both rent control coverage and stamp duty, this template is a starting point that should be reviewed against the law of the state where the premises are situated before execution.

Information to customize

• Name of the Lessor (property owner)

• Registered/residential address of the Lessor

• Name of the Lessee (tenant business)

• Registered address of the Lessee

• Description and address of the leased premises

• Permitted use of the premises

• Lease term (in months)

• Monthly rent (INR)

• Security deposit (INR)

• Lock-in period (in months), if any

• Annual rent escalation (%), if any

• Lease commencement date

Customize your template

Frequently asked questions

Does rent control law apply to my commercial lease in India?

It depends on the state where the premises are located. Each state has its own Rent Control Act (or, in some states, has adopted the Model Tenancy Act framework), and many exclude commercial premises above a certain rent, or exclude commercial premises altogether. There is no single national rule, so this should be checked against the law of the specific state before finalising eviction and renewal terms.

What is the difference between a lease and a leave-and-license agreement?

A lease under the Transfer of Property Act 1882 transfers an interest in the property to the tenant, while a leave-and-license arrangement under the Indian Easements Act 1882 grants only a personal permission to use the premises without any transfer of interest. Leave-and-license is often preferred by landlords in states with strong rent-control protections because it is generally easier to terminate; what matters is the substance of the rights granted, not the label used in the document.

How much stamp duty applies to a commercial lease deed in India?

Stamp duty rates and registration requirements are set by each state's own stamp legislation and vary significantly, typically based on the lease term and the rent plus deposit involved. There is no uniform national rate, so you should confirm the applicable duty with a local sub-registrar or advocate before execution, and register the lease if the term exceeds one year.

Is a lock-in period mandatory in a commercial lease?

No. A lock-in period is a matter of negotiation between the parties, not a statutory requirement, though it is common in commercial leases to protect the landlord's rental income and the tenant's fit-out investment. It should be drafted with clear consequences if either party seeks to exit early.

Does GST apply to commercial rent in India?

Renting out commercial property is generally treated as a taxable supply of services under GST, and a landlord registered under GST is typically required to charge GST on the rent invoiced to the tenant. Specific treatment can depend on the landlord's registration status and turnover, so this should be confirmed with a tax advisor for your situation.