Hostel accommodation under Rs. 1,000 per day exempt from GST until July 2022, taxable at 12% thereafter

AAR UP ruled that hostel accommodation services charging less than Rs. 1,000 per day qualified for GST exemption under Notification No. 12/2017-CT(Rate) from 01.08.2021 to 12.07.2022, as hostels fall under "whatever name called" provision for residential accommodation services. However, post-amendment effective 13.07.2022, such services became taxable at 12% under Notification No. 11/2017-CT(Rate) as the exemption entry was omitted, making hostel services no longer exempt from GST liability.

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Issues Involved:
1. Exemption from GST liability for hostel accommodation provided by the applicant charging less than Rs. 1,000/- per day during the period from 01.08.2021 to 12.07.2022.
2. Exemption from GST liability for hostel accommodation provided by the applicant charging less than Rs. 1,000/- per day during the period from 13.07.2022 till today and similar transactions in the future.

Summary:

Issue 1: Exemption from GST liability for hostel accommodation provided by the applicant charging less than Rs. 1,000/- per day during the period from 01.08.2021 to 12.07.2022.

The applicant, M/s V S Institute & Hostel Private Limited, provides hostel services to students of educational institutions, including food, electricity, Wi-Fi, and water, with the annual hostel rent below Rs. 1,000/- per day. The applicant sought clarification on whether such services are exempt from GST under Sl.No. 12 and/or 14 of Exemption Notification No. 12/2017-CT(Rate) dated 28.06.2017.

The relevant portions of the Notification No. 12/2017-CT(Rate) and CBIC's Circular No. 32/06/2018-GST dated 12.02.2018 were examined, which clarified that services by a hotel, inn, guest house, club, or campsite for residential or lodging purposes with declared tariff below Rs. 1,000/- per day are exempt from GST. The Authority ruled affirmatively, confirming that the hostel accommodation provided by the applicant during this period is exempt from GST liability.

Issue 2: Exemption from GST liability for hostel accommodation provided by the applicant charging less than Rs. 1,000/- per day during the period from 13.07.2022 till today and similar transactions in the future.

The applicant also sought clarification on the exemption status for hostel accommodation provided from 13.07.2022 onwards. The Notification No. 04/2022-CT (Rate) dated 13.07.2022 amended the principal Notification No. 12/2017-CT(Rate), omitting Entry No. 14 and modifying Entry No. 12 to exclude residential dwellings rented to registered persons.

The Authority found that from 18.07.2022 onwards, the services provided by the applicant would be taxable under the relevant entry of Notification No. 11/2017-Central Tax (Rate) as amended, with a tax rate of 12% if the unit accommodation per day is less than Rs. 1,000/-. Therefore, the Authority ruled negatively, stating that hostel accommodation provided by the applicant from 13.07.2022 onwards is not exempt from GST liability.

Ruling:

1. Question 1: Whether hostel accommodation provided by the Applicant to the students for residential purposes charging less than Rs. 1,000/- per day during the period from 01.08.2021 to 12.07.2022 is exempted from GST liability under Sl.No. 12 and/or 14 of the Exemption Notification No. 12/2017-CT(Rate) dated 28.06.2017Rs.
- Answer: Replied in Affirmative.

2. Question 2: Whether hostel accommodation provided by the Applicant to the students for residential purposes charging less than Rs. 1,000/- per day during the period from 13.07.2022 till today and also similar transactions to be undertaken in the future is exempted from GST liability under Sl.No. 12 of the Exemption Notification No. 12/2017-CT(Rate) dated 28.06.2017 as amended vide Notification No. 04/2022-CT (Rate) dated 13.07.2022Rs.
- Answer: Replied in Negative.

This ruling is valid only within the jurisdiction of the Authority for Advance Ruling Uttar Pradesh and subject to the provisions under Section 103(2) of the CGST Act, 2017 until and unless declared void under Section 104(1) of the Act.

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