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 residential renting may not apply when flats are leased to an operator who sublets as service accommodation.
Where an owner leases flats to an operator who uses them as commercial accommodation, the supply from owner to operator does not qualify for the Notification No.12/2017 CGST exemption for renting of a residential dwelling for use as residence. If the corporate receiving accommodation uses it as a further commercial supply, the exemption likewise will not apply and tax invoicing and input tax credit consequences follow; if the ultimate use is genuine residence by employees, the exemption may be available.