Key takeaways
Commercial property is usually bought for rental income; assess yield, tenant quality and vacancy risk.
Check land use, building approvals, fire NOC and parking norms carefully.
Commercial loans typically have different LTVs and rates from home loans.
GST and tax treatment differ from residential property.

Shops and offices can offer higher rental yields than homes, but they come with different risks and rules.

Residential vs commercial

Factor	Residential	Commercial
Typical rental yield	Lower	Often higher
Lease length	Usually short	Often longer, with lock-ins
Tenant	Individuals, families	Businesses
Vacancy risk	Lower in most markets	Can be high
Rent on lease	GST generally exempt for residential use	GST may apply above thresholds
Loans	Home loans	Commercial property loans

Key checks

Land use is commercial. See CLU in Punjab.
Approvals and occupancy certificate.
RERA registration for new projects.
Fire safety and parking compliance.
Footfall and visibility for shops.
Maintenance charges, often higher.
Title and encumbrances. See encumbrance checks.

Assured returns and lease-guarantee schemes

Some developers offer "assured returns" until a tenant is found. Treat them cautiously; they depend on the developer's finances, and regulators have scrutinised such schemes.

Calculating yield

Gross yield = annual rent ÷ purchase price × 100. Net yield deducts maintenance, property tax, insurance and vacancy allowance.

Lease terms

Lock-in period, rent escalation, security deposit, maintenance responsibility and fit-out periods matter. Register leases over one year. See why documents must be registered.

Taxes

GST on under-construction commercial property.
Rental income taxed under house property.
Capital gains on sale. See capital gains tax.

Frequently asked questions

Is commercial property a better investment than residential?

It can offer higher yields but carries higher vacancy and tenant risks. Assess location, tenant quality and costs.

Can I get a home loan for a shop?

No. Shops and offices are financed with commercial property loans, which have different terms.

Is GST charged on commercial rent?

Rent from commercial property may attract GST above registration thresholds.

Are assured-return schemes safe?

They carry risk because they depend on the developer's finances. Read terms carefully and take advice.

Related HomeAcross guides

Official sources and further reading

This guide is general information, not legal, tax or financial advice. Rules, rates and procedures change; confirm current requirements with the relevant authority or a qualified professional before you act. Read our editorial policy.

Buying a Shop or Office: Commercial Property Basics

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