Paying Guest Accomodation

[Mohit Gupta]

Two Buildings are taken on rent by Mr. A at say INR 60,000 per month, per building on a 11 month residential accommodation lease. The same building is then furnished and converted to a fully furnished accommodation with about 20 beds per building and given on rent to individual students and working women at a monthly rent averaging to about 8000pm. Their are individual meters installed for charging individuals residents for Ac and geyser electricity consumption.

As part of bundled services - meals are provided to all residents.

Please suggest if the service tax is applicable as the accommodation has been given to individuals for a long term stay averaging more than an year per individual.

As per the clauses read by me on Google: even though the total receipts are more than 11 lac per annum, service tax should not be applicable as

1. The sub tenancy of individuals should fall under residential dwelling - not meant for temporary stay but as home to individuals.

2. the rent collected by us per bed is far less than ₹ 1000 per day.

3. The period of stay of individuals is more than 3 months.

Please suggest if service tax is applicable.

Also please suggest on the impact of GST that becomes applicable effective July 2017.

AI Summary

Service Tax Query: Renting Furnished Accommodations to Students and Working Women. Consider Abatement or Exemption Based on Rent. Mr. A rents two buildings for INR 60,000 each per month, converts them into furnished accommodations, and rents them to students and working women for INR 8,000 per month per bed. The query concerns whether service tax applies, given the annual receipts exceed INR 11 lakh. The argument against tax applicability includes the nature of the stay being residential, rent per bed being under INR 1,000 per day, and stays exceeding three months. Responses suggest choosing between availing a 30% abatement or exemption based on rent per person, and note uncertainty regarding GST impact until its enactment.