Commercial Lease / Office & Shop Rent Agreement Format in India (2026)
What a commercial lease or shop and office rent agreement should contain in India, how it differs from a residential agreement, when it must be registered, and a sample template block you can adapt.
Format Guide · Commercial Lease
A commercial lease is a contract to rent premises for business use, such as an office, a shop or a warehouse. Unlike a residential 11-month agreement, commercial leases are often longer, are often registered, and carry clauses on lock-in, rent escalation, fit-outs, maintenance (CAM) and permitted use. This guide shows how a commercial lease differs from a home rent agreement, the clauses that matter, how registration and stamp duty work, and a sample template block. Last verified October 2026.
- What it is: a contract to rent premises for business use, such as an office, shop or warehouse.
- Key difference: longer term, usually registered, with lock-in, escalation, CAM, fit-out and permitted-use clauses.
- Registration: leases over one year generally need registration (Registration Act, Section 17(1)(d)).
- Stamp duty: set by each state. Check your state’s current schedule.
- Home rent instead? See the rent agreement format guide.
01How a commercial lease differs from a residential rent agreement
Many small businesses start with a home-style rent agreement copied from the internet. That is risky. A shop or office has money at stake that a flat does not: stock, fit-outs, licences tied to the address, and customers who know where to find you. The agreement has to protect that.
Term and registration
A residential agreement is often made for 11 months, mainly to stay below the registration limit. A commercial lease is usually for three, five, nine or even more years, because a business needs time to recover its fit-out cost. Longer terms usually mean registration. See the registration section below.
Business-specific clauses
A commercial lease adds clauses that a home agreement never needs: lock-in period, yearly rent escalation, fit-out and reinstatement, common area maintenance (CAM) charges, permitted use, signage, sub-letting and a clear exit route.
Tax and compliance angle
Commercial rent can bring GST and TDS questions, and the address is often used for GST registration, shop and establishment licences and other business records. The agreement should say who handles these.
If you only need a home rent agreement, see our guide to the rent agreement format in India. This page is only about business premises.
02Essential clauses in a commercial lease
These are the clauses that cause most disputes when they are missing or vague. Use plain words and put numbers in figures and words.
1. Term and renewal
State the start date, the end date and whether the tenant has a right to renew. If renewal is promised, say on what terms and how much notice is needed. A vague line such as "renewable by mutual consent" gives the tenant no real right.
2. Lock-in period
A lock-in is a period in which neither side can exit, or only one side can. State its length, and the penalty for leaving early (often a few months of rent). Check that the lock-in binds both parties fairly.
3. Rent and escalation
Give the monthly rent, due date, payment mode and late-payment interest. Escalation is usually a fixed percentage each year or at a set interval, such as every 11 or 12 months. Write the exact percentage and the date it applies, so there is nothing to argue about later.
4. Security deposit
Write the amount, whether it earns interest, when it is refunded after handover, and what deductions are allowed (unpaid rent, damage, utility dues). Commercial deposits are often several months of rent, so this clause matters.
5. CAM and other charges
In malls, business parks and managed buildings, the tenant pays common area maintenance charges, plus electricity, water and property tax share in some cases. List each charge, who pays it and how it can change.
6. Permitted use and compliance
State exactly what business the tenant may run. Say that the tenant will get its own licences, and that the landlord will give the documents needed for them, such as ownership proof and a no-objection letter.
7. Fit-outs and reinstatement
Say whether the tenant may build, partition or put up signage, whether approval is needed, and whether the premises must be restored at exit. Also say who owns permanent fittings.
8. Sub-letting and assignment
Most landlords bar sub-letting without written consent. A tenant that may want to share space or transfer the lease to a buyer of its business should negotiate this clause early.
9. Termination and exit
List the grounds for termination (non-payment, breach, misuse), the notice period, the cure period, the handover process and what happens to the deposit. A clean exit clause saves months of argument.
10. Dispute resolution
Name the governing law, the courts that have jurisdiction and, if you prefer, an arbitration clause with a seat and a number of arbitrators. For one person acting for another at signing, see our note on the power of attorney format.
03Registration and stamp duty
Two rules decide most of the paperwork. Both come from central law, but the amounts depend on your state.
When registration is needed
Under Section 17(1)(d) of the Registration Act, 1908, a lease of immovable property for more than one year, or one reserving a yearly rent, must be registered. Section 107 of the Transfer of Property Act, 1882 says the same for such leases: they can be made only by a registered instrument. A lease for less than a year can be made without registration, which is why 11-month agreements are common for homes. For business premises that you will use for years, registration is the safer path, because an unregistered long lease can be hard to enforce in court.
Stamp duty is state-wise
Stamp duty on a lease is set by each state, and it usually depends on the lease term, the rent and the deposit. Longer terms often attract higher duty, and for very long leases the duty can come close to that on a sale. Rates, minimums and registration fees differ between Delhi, Maharashtra, Karnataka, Tamil Nadu and other states, and many states now allow e-stamping.
We do not quote a single rate here because it would be wrong for most readers. Check the current schedule of your state’s Stamp Act or the state registration department website, or ask a local advocate, before you sign.
Practical tip
Pay stamp duty before signing. A document that is not properly stamped can be impounded and may need a penalty to be admitted as evidence. Keep the registered copy and the e-stamp receipt together.
04Sample template block
The block below is a plain starting point. It is not legal advice. Have an advocate adapt it to your state, your property and your commercial deal.
Sample: Commercial Lease Agreement (short form)
This Lease Agreement is made on [date] at [city] between [Landlord name], [address] (the “Lessor”) and [Tenant name / company], [address] (the “Lessee”).
1. Premises. The Lessor leases to the Lessee the [office / shop / warehouse] at [full address], admeasuring [area] sq ft (the “Premises”).
2. Term. [X] years from [start date], with a lock-in of [Y] months for [both parties / the Lessee]. Renewal: [terms or none].
3. Rent. Rs [amount] per month, payable by the [date] of each month by [mode]. Rent increases by [Z]% every [12] months.
4. Security deposit. Rs [amount], interest-free and refundable within [N] days of handover, after lawful deductions.
5. Maintenance and charges. The Lessee pays CAM of Rs [amount], plus electricity, water and [other charges]. The Lessor pays property tax.
6. Use. The Premises will be used only for [business]. The Lessee will obtain all licences needed for its business.
7. Fit-outs. Changes need the Lessor’s written consent. On exit the Lessee will [restore / leave] the Premises.
8. Sub-letting. Not allowed without prior written consent of the Lessor.
9. Termination. Either party may end this Agreement by [N] months’ written notice after the lock-in, or immediately for uncured breach after [N] days’ notice.
10. Law and disputes. Indian law applies. The courts at [city] have jurisdiction. [Optional arbitration clause.]
Signed by both parties in the presence of two witnesses. Stamped and registered as required by law.
05Common mistakes to avoid
- Using an 11-month home format for a long business lease. The term, registration and clauses are all wrong for the use.
- Leaving escalation vague. Always give the percentage and the date.
- Skipping a lock-in or exit clause. One side can then walk away or hold the other hostage.
- Not checking title. Ask for the ownership papers and approvals for commercial use before paying a deposit.
- Ignoring stamping and registration. This can make the lease weak as evidence.
- No dispute clause. Rent and eviction disputes can run for years. A clear forum helps.
06Where Claw fits
Claw is an all-in-one legaltech platform for Indian advocates, law firms, and corporate legal teams, combining AI-based case search, an AI legal assistant (Legal GPT), case management, and compliance automation across all Indian courts and tribunals.
For a lease, Claw is useful in two honest ways. First, the contract side: Claw supports contract drafting from templates, a clause library, version control and renewal and obligation alerts, so rent escalation dates and lock-in expiry do not get missed. Second, if a lease turns into a dispute, Claw can track the case across courts with hearing alerts and a calendar, and its case search helps you find judgments to support your position. Claw has a free plan for individual advocates, with paid plans for teams. Claw does not use customer case documents to train AI models.
Claw does not replace advice from an advocate on your state’s stamp duty and registration, and a drafted template still needs review before signing.
07Sources and further reading
- The Registration Act, 1908 (Section 17) and the Transfer of Property Act, 1882 (Section 107): indiacode.nic.in
- State stamp duty schedules: see your state registration and stamps department website.
- Claw: clawlaw.in
This page is general information, not legal advice. Last verified October 2026.
08Frequently asked questions
What is a commercial lease agreement?
It is a contract under which a landlord rents premises such as an office, shop or warehouse to a tenant for business use. It covers rent, term, lock-in, escalation, deposit, maintenance charges, permitted use and exit.
Is registration compulsory for a commercial rent agreement in India?
A lease for more than one year, or one reserving a yearly rent, must be registered under Section 17(1)(d) of the Registration Act, 1908. Shorter leases can avoid registration, but long business tenancies are safer when registered.
How much stamp duty is payable on a shop or office lease?
It depends on your state and usually on the term, rent and deposit. There is no single national rate, so check your state stamp schedule or ask a local advocate before signing.
What is a lock-in period in a commercial lease?
It is a fixed period during which one or both parties cannot terminate the lease, or must pay a penalty to do so. Always state its length and the penalty in the agreement.
What is CAM in a lease?
CAM means common area maintenance charges. These cover shared spaces such as lobbies, lifts, parking and security. The lease should list what is included and how the charge can change.
Can Claw help with commercial lease agreements?
Yes, in two ways. Claw supports contract drafting from templates with a clause library and renewal alerts, and it can track lease-related court cases with hearing alerts. A draft should still be reviewed by an advocate before signing.