Company-Leased Flat vs Serviced Apartment in Bangalore: The Real Cost

Most comparisons of corporate accommodation stop at the monthly rate. This page puts the other costs next to it, from the source documents: the Income-tax Rules, 2026, in force since 1 April 2026, for how the employee is taxed; the GST notifications for what the company pays on residential rent; the Karnataka Stamp Act for the agreement; and advertised HSR Layout rents for the arithmetic. It is part of our guide to corporate housing in Bangalore, which covers all four options a company has, including hotels and guest houses.

What is the difference between a company-leased flat and a serviced apartment?

A company-leased flat is a tenancy in the company's name, usually for 11 months, while a serviced apartment is a stay billed as an accommodation service, with no tenancy. That legal difference drives every cost difference in the table.

Why a serviced apartment has no deposit is a legal point, not a marketing one: a licence under section 52 of the Indian Easements Act, 1882 creates no interest in the property, so there is nothing for a tenancy deposit to secure. Our guide to what a serviced apartment includes sets out what is normally bundled into the rate and what is not.

How much cash does a company need to lease a flat in Bangalore?

For a furnished 1 BHK in HSR Layout, roughly ₹2 lakh to ₹4.9 lakh before anyone moves in, most of it a refundable deposit. Karnataka sets no statutory ceiling on residential deposits, so the landlord's ask decides most of the total. The table works it out at five and ten months' deposit, on the ₹28,000 to ₹40,000 a month advertised for furnished 1 BHK flats in HSR Layout.

Arithmetic on advertised asking rents, not a quote. Brokerage of one month's rent is the common Bengaluru quote; two months is sometimes asked. Stamp duty is 0.5% of the rent for the term plus the deposit, capped at ₹500, under Article 30 of the Karnataka Stamp Act, 1957, so every row reaches the cap. GST applies only if the company is GST-registered.

Three things in that total are easy to miss. The deposit counts towards stamp duty, which is why almost every Bengaluru agreement pays the full ₹500; our stamp duty calculator works out any other case. An agreement of 11 months does not need registering, because section 17 of the Registration Act, 1908 makes registration compulsory only for leases of more than a year, from year to year, or reserving a yearly rent. And the deposit is refundable but not free: it is company cash held by a landlord for the length of the lease, and it comes back only after the flat is handed over. For the same arithmetic from an individual tenant's side, see our HSR Layout cost of living guide.

Does a company pay GST on a flat it rents for an employee?

Yes, if the company is GST-registered: 18% of the rent, paid by the company itself under reverse charge. Notification 05/2022-Central Tax (Rate), dated 13 July 2022, added "service by way of renting of residential dwelling to a registered person" to the reverse-charge list with effect from 18 July 2022. The landlord does not charge it; the tenant pays it, whether or not the landlord is registered.

The purpose of the letting does not change this. In an advance ruling (Order No. 04/ODISHA-AAR/2021-22), the Odisha Authority for Advance Ruling held that a registered company renting residential houses as guest houses for its employees had to pay GST under reverse charge, noting that the notification sets no condition on how the dwelling is used. An advance ruling binds only the company that asked for it, but the reasoning follows the plain words of the notification.

• Whether the company gets the GST back is a separate question. Paying reverse-charge GST does not settle whether it can be claimed as input tax credit when the flat houses an employee. That depends on the company's facts and the credit restrictions in the GST law, and this page does not take a position on it. The break-even table below shows the answer both ways.
• A serviced apartment works the other way round. The operator charges GST on its invoice at the accommodation rates: 5% without input tax credit up to ₹7,500 per unit per day, and 18% with full credit above it. Because the place of supply is the property, a company with no GST registration in Karnataka cannot use the credit on a Bengaluru stay. Our corporate housing guide explains that trap in full.
• Long, cheap stays can be exempt altogether. Accommodation of up to ₹20,000 per person per month, supplied for at least 90 continuous days, has been exempt from GST since 15 July 2024. Our long-stay playbook covers when that applies.

How is the employee taxed on each option?

On a company-leased flat, the employee is taxed on the lower of the rent or 10% of salary. On a serviced apartment, the employee is taxed on the lower of the charges or 24% of salary, because the rules treat a service apartment as a hotel. Both come from Table I of rule 15(2) of the Income-tax Rules, 2026, which values accommodation provided by an employer under section 17(1) of the Income-tax Act, 2025.

• Flat taken on lease or rent by the employer: "Actual amount of lease rental paid or payable by the employer or 10% of salary", whichever is lower, for the period the employee occupies it, reduced by any rent the employee pays. If it is furnished, the rule adds 10% a year of the cost of the furniture, or the hire charges paid for it.
• Accommodation in a hotel: "Actual charges paid or payable to such hotel or 24% of salary", whichever is lower, for the period it is provided, reduced by any rent the employee pays. Rule 15(8)(d) says "hotel" includes "licensed accommodation in the nature of motel, service apartment or guest house".
• The 15-day exception: the hotel valuation does not apply "where the employee is provided such accommodation for a period not exceeding in aggregate fifteen days on his transfer from one place to another". Practitioners read the word "transfer" differently for a new joiner who is relocating, so ask your payroll adviser before relying on it for a new hire.

The percentages are caps on the taxable value, so the gap matters most for a well-paid employee in an expensive unit. The table shows the most each option can add to the employee's taxable salary each month.

Upper limits under rule 15(2), Table I. The actual value is the lower of the cap and the rent or charges, less any rent the employee pays. The tax on that value depends on the employee's slab and regime.

A worked case: an employee on ₹2,00,000 a month in a company-leased flat at ₹40,000 is taxed on ₹20,000 a month, 10% of salary. The same employee in a serviced apartment costing ₹48,000 a month or more is taxed on ₹48,000. These are the same percentages the old law used after September 2023, when CBDT cut the leased-accommodation rate from 15% to 10%; the 2026 Rules carried them over unchanged. The full valuation table, including employer-owned housing, is in our corporate housing guide.

Two practical consequences follow. A company can reduce either perquisite by recovering part of the cost from the employee, because both values are reduced by rent the employee actually pays. And for a long assignment on a senior salary, the extra perquisite on a serviced apartment can cost the employee more in tax each month than the company saves by skipping the lease, which is worth raising with the employee before you decide.

When does a company-leased flat break even?

The longer the stay, the better the flat looks, because its one-off costs are spread over more months. To compare like with like, add the monthly rent, the 18% reverse-charge GST if the company cannot recover it, and the brokerage and stamp duty divided by the months of the stay. The serviced apartment rate that costs the same is that figure divided by 1.05, because the serviced apartment's 5% GST is not recoverable.

Arithmetic, not a quote: monthly rent, plus 18% of it where GST is not recovered, plus one month's brokerage and ₹500 stamp duty spread over the stay. The break-even rate is before the serviced apartment's 5% GST. Excludes the deposit (refundable), electricity, water, internet, maintenance, cleaning and any furnishing, all of which a serviced apartment usually includes and which would raise the flat's real cost.

Read the table this way: if a serviced apartment is quoted below the break-even rate for your stay length, it is the cheaper option outright; above it, the flat is cheaper on paper and the question becomes whether the deposit, the lock-in and the admin are worth the saving. Two things move the answer in practice:

• Leaving early. The flat's figures assume the employee stays the whole period. An 11-month agreement usually carries a lock-in, and if the assignment ends inside it the company can owe rent for months nobody lives there. Read the lock-in and notice clauses before you sign; our rental agreement generator shows what a standard Karnataka agreement contains.
• Bills and setup. The table leaves out everything a serviced apartment normally bundles. An unfurnished flat at a lower rent also needs furnishing, which is a cost the company carries up front and, under rule 15, adds to the employee's perquisite.

Should the company pay HRA and let the employee rent instead?

It is the simplest option for the company and the most expensive one for the employee at the start. The employee signs the lease and pays the deposit, the company pays a house rent allowance through payroll, and the company has no lease, no reverse-charge GST and no rent TDS of its own. The HRA exemption is available only to employees who choose the old tax regime; under the default new regime the allowance is fully taxable. Employees who do claim it need monthly rent receipts, which our rent receipt generator produces, and everything they need to do on arrival is in relocating to Bangalore: the first 30 days.

Which costs a company less overall?

For a stay of a few months, usually the serviced apartment; for a year or more, usually the flat; in between, it depends on four numbers. Before you decide, get these:

1. The real deposit and brokerage ask on the flat you would take, not an average.
2. Whether your company can recover reverse-charge GST on residential rent, from your GST adviser. It moves the flat's monthly cost by 18%.
3. The serviced apartment's monthly quote, and whether it falls in the 5% or the 18% GST band.
4. The employee's salary, to see how far apart the 10% and 24% perquisite caps are for them.

Then compare the quote with the break-even table above for your stay length. For how long each kind of stay usually suits which option, including hotels and guest houses, see the decision rule in our corporate housing guide.

Common questions about company-leased flats and serviced apartments

Per month, usually yes, but not up front and not always in total. A company leasing a furnished 1 BHK in HSR Layout at the advertised 28,000 to 40,000 rupees a month needs roughly 2 lakh to 4.9 lakh rupees before move-in, mostly a refundable deposit, and pays 18% GST on the rent under reverse charge if it is GST-registered. A serviced apartment needs no deposit. Over a short stay the flat's one-off costs and GST can outweigh its lower rent.

Yes, if the company is GST-registered. Since 18 July 2022, under Notification 05/2022-Central Tax (Rate), renting a residential dwelling to a registered person is taxed at 18% under reverse charge, so the company as tenant pays the GST itself, whether or not the landlord is registered. An Odisha advance ruling applied this to a company renting houses for its employees. Whether the company can then claim that GST back as input tax credit depends on its facts, so ask its GST adviser.

As hotel accommodation. Rule 15 of the Income-tax Rules, 2026 defines hotel to include licensed accommodation in the nature of a service apartment, and values hotel accommodation provided by an employer at the lower of the actual charges or 24% of salary for the period, reduced by any rent the employee pays. Accommodation for up to 15 days in aggregate on a transfer from one place to another is excluded.

It is a perquisite under section 17(1) of the Income-tax Act, 2025, valued under rule 15(2) of the Income-tax Rules, 2026, which took over from section 17(2) and Rule 3 of the old law on 1 April 2026. For a flat the employer takes on lease or rent, the taxable value is the lower of the actual rent or 10% of salary for the period, reduced by any rent the employee pays. Where the flat is furnished, 10% a year of the cost of the furniture, or the hire charges, is added.

For a furnished 1 BHK in HSR Layout at the advertised 28,000 to 40,000 rupees a month, roughly 2 lakh to 4.9 lakh rupees before move-in: a deposit of five to ten months' rent, one month's brokerage, the first month's rent, 500 rupees of stamp duty and, for a GST-registered company, 18% reverse-charge GST on the first month. Karnataka sets no statutory cap on the deposit, so the quote you receive decides most of that figure.

When the stay is long enough to spread the flat's one-off costs thin. Add the monthly rent, the reverse-charge GST if the company cannot recover it, and the brokerage and stamp duty divided by the months of the stay. If a serviced apartment's monthly rate plus 5% GST is above that figure, the flat is cheaper. At 28,000 rupees rent with no GST credit, the flat costs about 42,500 rupees a month over three months and 35,600 rupees over eleven.

Yes. The employee then signs the lease, pays the deposit and claims the house rent allowance exemption against rent receipts, and the company has no lease, no reverse-charge GST and no rent TDS of its own. The HRA exemption is available only to employees who choose the old tax regime, so under the default new regime the allowance is fully taxable. The deposit, often several months' rent, then falls on the employee.