Renting of residential premise for residential use

[Jinesh Mehta]

Dear Experts, please share your input:

Service provider is going to take building on lease from building owners and giving these building on Rent mainly to students who come from out of station for education purpose and person coming from different city for employment. hence service provider is providing service of "Renting of residential premise for residence use".

Along with this, they are also giving following services in the package itself:
(Package cost is fixed for all. All have to compulsory avail these services along with residential service)

i) Meals, breakfast & dinner

ii) Transport facility

iii) Security service

iv) Laundry service

v) Gym

vi) Indoor games cum activity

vii) Outdoor sports space

viii) Doctor on call & Insurance

Question:

1) Can it be considered as composite supply considering "Renting of residential premise for residence use" as primary service? And by this whole service will be exempt as same has been covered by exemption notification 12/2017.

[KASTURI SETHI]

This is not a composite supply. Not naturally bundled. All services are independent of each other.

[Jinesh Mehta]

Thank You sir.

Is it possible to claim exemption as per notification no 12/2017 - central tax (Rate) by taking benefit of any one of following two entry? please share reason in brief of selection of entry out of two below.

Entry No 12. Services by way of renting of residential dwelling for use as residence.

Entry No 14. Services by a hotel, inn, guest house, club or campsite, by whatever name called, for residential or lodging purposes, having declared tariff of a unit of accommodation below one thousand rupees per day or equivalent.

[KASTURI SETHI]

Yes. Exemption under Entry No.14 is admissible. Rent per unit (bed) must be below ₹ 1000/- per day. Not above ₹ 999/-

[Jinesh Mehta]

Thank You sir for your prompt response.

Can studio having two bed rooms, one common hall and common wash room considered to be two different unit of accommodation for considering limit of 1000 Rs?

Premise is rented to four different students and charge per students will be 10000/- per month.

Total becomes 40000/-

Less than 1000/- if we consider it as two unit of accommodation.

More than 1000/- if we consider it as one unit of accommodation.

[KASTURI SETHI]

These are to be treated as two units.

[KASTURI SETHI]

Also go through the decision of AAR in this context. For your knowledge sake :

2020 (4) TMI 692 - AUTHORITY FOR ADVANCE RULING KARNATAKA IN RE: M/S. SRI. TAGHAR VASUDEVA AMBRISH

Decided on 23.3.2020

[Jinesh Mehta]

Thank you Sir for sharing your views and AAR for enhancing knowledge.

[Alkesh Jani]

Dear sir,

if possible please share the decision of advance ruling.

Thanks in advance

with regards

[Jinesh Mehta]

Dear Sir,

Please find advance ruling on below mentioned link.

https://gst.kar.nic.in/Others/Advance_Ruling_Orders.aspx

Thanks.

[KASTURI SETHI]

Thank you very much, Mr.Mehta.

[Alkesh Jani]

Thanks Mr. Mehta

[KUNAL DESAI]

In the recent Advance Ruling (though it is not based on exact facts), if we consider the context on which it is ruled, then such composite supply will be considered as exempted.

2020 (4) TMI 695 - AUTHORITY ON ADVANCE RULINGS, KARNATAKA IN RE: M/S. SRISAI LUXURIOUS STAY LLP

[KASTURI SETHI]

Facts of the cited decision are not similar to the facts mentioned in the querist's query. The main issue is whether the services are naturally bundled or not.

AI Summary

Exempt renting of residential premises: bundled services treated independently; exemption requires declared tariff per unit below specified threshold.
Ancillary amenities provided with rented residential accommodation are independent services and not a naturally bundled composite supply with the renting component. Exemption under the lodging establishment entry depends on the declared per unit tariff being below the prescribed threshold; multiple bedrooms in a single studio may be treated as separate units for calculating that per unit tariff, with Advance Rulings cited for guidance.