Rent on hostel, paying accommodations to attract 12% GST; here's why
₹1,000/- per day, provided by hotels, clubs, campsites etc. till July 17, 2022. "PG/Hostel Rent paid by inhabitants do not qualify for GST exemption… as the services provided by applicant are not akin to renting of residential dwelling for use as residence," said the Bengaluru bench.
MP Ravi Prasad and Kiran Reddy T of the Karnataka AAR ruled that GST on reverse charge will be applicable on the rental to be paid to the landowners by the applicant as the services of the applicant are leviable to GST and thus the applicant has to obtain GST registration, it added. Residential dwelling is a residential accommodation meant for permanent stay and does not include guest house, lodge or like places, according to the bench. In the instant case, the applicant in his own admission claims to be providing PG/hostel services which inter alia refer to 'paying guest accommodation / hostel' services and are akin to guest house and lodging services and therefore can't be termed as residential dwelling'," the Bengaluru bench said.
In a similar reference by Noida-based V S Institute & Hostel Pvt Ltd, the Lucknow bench of the AAR said that GST would apply on hostel accommodation costing less than ₹1,000 per day. "Hence, from July 18, 2022, onward services provided by an applicant will be (covered under GST for taxation)…," the Lucknow bench AAR said. AMRG & Associates Senior Partner Rajat Mohan said 12 per cent tax on student accommodation in hostels and dormitories would lead to a higher cost for Indian families.
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