GST on Leasing / renting to Hostel

[SANJAY JAIN]

There is a Company A which owns 10 flats and Company B is in the business of running hostel and service apartments. The Company A entered the agreement of renting agreement of 11 months with Company B.

The Company B will further supply the services of these flats through 11 months rental agreement with various corporates for stay of their employees.

1. Whether the Company A claim the exemption of GST on this transaction as per the entry in notification no 12/2017 CGST for renting of immovable property for use as residence?
2. Whether the Company B can also claim the above exemptions since it has given these flats to Corporates for the residential use of their employees?

Thanks in advance.

Sanjay Jain

AI Summary

GST Exemption for Leasing Properties: Company A Ineligible, Company B May Qualify if Used for Employee Housing A discussion on the Goods and Services Tax (GST) exemption for leasing or renting properties to hostels involves two companies: Company A, which owns flats, and Company B, which operates hostels and service apartments. Company A rents flats to Company B, which then leases them to corporates for employee accommodation. The query is whether both companies can claim GST exemptions under notification 12/2017 CGST for residential use. Responses indicate that Company A cannot claim the exemption as the flats are not used directly for residential purposes by Company B. However, Company B might claim the exemption if the flats are ultimately used for employee residence. The consensus is that Company A should invoice Company B, and Company B should not charge tax to corporates if the exemption applies.