Dedicated locality research platform
Enter your email address and you will receive
a link to reset your password
In two separate cases, the GST-Authority for Advance Rulings (AAR) has provided clarity on the applicability of goods and services tax (GST) to hostel accommodation rent. The AAR ruled that hostel rent paid by occupants does not fall under the category of a 'residential dwelling' and, therefore, does not qualify for exemption from GST. The ruling impacts hostels that charge above Rs 1,000 per day for accommodation. Prior to July 17, 2022, hostel accommodation with a tariff below Rs 1,000 per day was exempt from GST, but now, it will attract a GST rate of 12%.
The cases brought before the AAR were from two different establishments. The first one was Srisai Luxurious Stay, a Bengaluru-based provider of paying guest accommodation and service apartments. The second case was presented by V.S. Institute and Hostel, located in Noida, which caters to students' residential needs and offers facilities like food, electricity, water, and Wi-Fi.
Both establishments argued that their services should be considered as residential dwellings, and thus, be exempt from GST. However, the AAR disagreed and clarified that a residential dwelling is an accommodation intended for permanent stay and does not include guesthouses, lodges, or similar places. In both cases, the AAR distinguished a residential dwelling from a hostel, leading to the conclusion that hostel accommodation does not qualify for GST exemption.
The Karnataka bench, in particular, emphasized that the accommodation provided by Srisai Luxurious Stay was not considered a residential dwelling, but rather individual rooms that were shared by unrelated individuals. Invoices were raised per bed on a monthly basis, and there was no provision of individual kitchen facilities. The AAR noted that additional facilities such as vehicle parking, washing machine usage, and access to a television were optional and would not be considered bundled services.
With this ruling in place, hostel accommodations charging above Rs 1,000 per day will now be liable to pay GST at a rate of 12%. However, the exemption remains in place for 'residential dwellings' rented for the purpose of residence to GST-unregistered individuals, including salaried individuals, students, and small business owners who are not required to register for GST.
This clarification by the AAR brings a clear distinction between residential dwellings and hostels for GST purposes. Hostel operators will need to ensure compliance with the applicable GST rates to avoid any potential non-compliance issues. On the other hand, individuals renting 'residential dwellings' for personal use can continue to enjoy the GST exemption, benefiting those who are not required to register for GST as per the regulations.
Propscience is India’s dedicated property news portal. We cover the latest events, news, trends, deals, new launches and more.
All our services and tools are completely free of cost and available 24X7!
We use cookies to give you the best possible service while using our website, please click accept and carry on browsing if you're happy with this. For more information see our Privacy Policy.
Okay, Got it!This disclaimer ("Disclaimer") is applicable to the entire Site. Upon entering the Site it is recommended that you immediately read the Terms and Conditions and Privacy Policy listed therein. Your continued usage of this Site will indicate your unconditional acceptance of the said Terms and Conditions and Privacy Policy. You hereby agree that Propscience reserves the right to modify at any time, the Terms and Conditions and Privacy Policy governing this Site without prior notification. Your usage of the Site implies that you will be bound by any such modification. You agree and acknowledge that it is your responsibility to periodically visit the Site and stay updated with the Terms and Conditions and Privacy Policy of the Website.
The information contained in this Site has been provided by Propscience for information purposes only. This information does not constitute legal, professional or commercial advice. Communication, content and material within the Site may include photographs and conceptual representations of projects under development. All computer-generated images shown on the Site are only indicative of actual designs and are sourced from third party sites.
The information on this Site may contain certain technical inaccuracies and typographical errors. Any errors or omissions brought to the attention of Propscience will be corrected as soon as possible. The content of this Site is being constantly modified to meet the terms, stipulations and recommendations of the Real Estate Regulation Act, 2016 ("RERA") and rules made thereunder and may vary from the content available as of date. All content may be updated from time to time and may at times be out of date. Propscience accepts no responsibility for keeping the information in this website up to date or any liability whatsoever for any failure to do so.
While every care has been taken to ensure that the content is useful, reliable and accurate, all content and information on the Site is provided on an "as is" and "as available" basis. Propscience does not accept any responsibility or liability with regard to the content, accuracy, legality and reliability of the information provided herein, or, for any loss or damage caused arising directly or indirectly in connection with reliance on the use of such information. No information given under this Site creates a warranty or expands the scope of any warranty that cannot be disclaimed under applicable law.
This Site provides links to other websites owned by third parties. Any reference or mention to third party websites, projects or services is for purely informational purposes only. This information does not constitute either an endorsement or a recommendation. Propscience accepts no responsibility for the content, reliability and information provided on these third-party websites. Propscience will not be held liable for any personal information of data collected by these third parties or for any virus or destructive properties that may be present on these third-party sites.
Your use of the Site is solely at your own risk. You agree and acknowledge that you are solely responsible for any action you take based upon this content and that Propscience is not liable for the same. All details regarding a project/property provided on this Site are updated on the basis of information available from the respective developers/owners/promoters. All such information will not be construed as an advertisement. To find out more about a project / development, please register/contact us to visit the site you are interested in. All decisions taken by you in this regard will be taken independently and Propscience will not be liable for any such loss in connection with the same. This Site is for guidance only. Your use of this Site - including any suggestions set out in the Site and or any use of the resources available on this Site, do not create any professional - client relationship between you and Propscience. Propscience cannot accept you as a client until certain formalities and requirements are met.
We use cookies to give you the best possible service while using our website, please accept it and continue browsing if you're happy with this. For more information see our Privacy Policy