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Hostel rent not exempt from GST, to attract 12% tax:
AAR
MUMBAI: The GST-Authority for Advance Rulings(AAR), in
two separate cases, has held that hostel rent paid by
inhabitants does not qualify for exemption from goods
and services tax (GST), as it is not a 'residential
dwelling'. Further, it pointed out that hostel
accommodation tariff below Rs 1,000 per day was exempt
from GST for a certain period and only up to July 17,
2022. Thus, hostel rent will attract GST at 12%.
Bengaluru-based Srisai
Luxurious Stay, which provides paying guest
accommodation and service apartments, submitted that
private hostels would be covered under the category of
residential dwellings and hence be exempt from GST.
Similarly Noida-based V.S. Institute and Hostel, which
serves students , submitted that it provides residential
facilities including food, electricity, water and Wi-Fi.
These would be covered under the definition of
'residential dwelling'.
There is no GST levy if a
'residential dwelling' is rented for 'the purpose of
residence' to GST-unregistered individuals (eg: salaried
individuals, students and small business owners who are
not required to register for GST, etc) .
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However, the AAR in both cases, distinguished a
residential dwelling from a hostel. "A residential
dwelling is an accommodation meant for permanent stay
and does not include guesthouse, lodge or like places,"
the AAR benches observed.
The Karnataka bench explained that the accommodation
provided was not a residential dwelling, but a room.
Unrelated people shared the same room and invoices were
raised per bed on a monthly basis. No individual kitchen
facility was made available . It also added that the
various additional facilities such as vehicle parking,
washing machine facility and television would not be
bundled services as these are optional.
Source::: THE TIMES OF INDIA,
dated 29/07/2023.
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