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Students could have to shell out extra for hostel accommodation as a 12% GST could be relevant on the hire paid, the Authority of Advance Ruling stated in two separate circumstances.
The Bengaluru bench of the Authority of Advance Ruling (AAR) stated hostels will not be akin to residential dwelling items and therefore will not be exempt from Goods and Services Tax (GST).
Also Read | Lease of residential premises as hostel is exempted from GST: HC
In an advance Ruling sought by Srisai Luxurious Stay LLP, the AAR stated GST exemption was relevant on the accommodation companies, of fees up to ₹1,000/- per day, offered by lodges, golf equipment, campsites and so on. until 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,” the Bengaluru bench stated.
GST on reverse cost shall be relevant on the rental to be paid to the landowners by the applicant because the companies of the applicant are leviable to GST and thus the applicant has to get hold of GST registration, it added.
“… Residential dwelling is a residential accommodation meant for permanent stay and does not include guest house, lodge or like places.
“In the moment case, the applicant in his personal admission claims to be offering PG/hostel companies which inter alia refer to ‘paying visitor accommodation/hostel’ companies and are akin to visitor home and lodging companies and due to this fact cannot 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 companies offered by an applicant shall be (lined beneath GST for taxation)…,” the Lucknow bench AAR said.
AMRG & Associates Senior Partner Rajat Mohan said 12% tax on student accommodation in hostels and dormitories would lead to a higher cost for Indian families.
“The GST council might think about taking a coverage determination to neutralise the tax price constructed into the complete schooling ecosystem, together with pupil’s accommodation,” Mr. Mohan stated.
