Residential Quarters to Employees

[Ashish Diwedi]

We are a manufacturing unit since 1980 registered under GST. We have constructed residential quarters for our workers and employees for their residential use and convenience in the year 2000. We give the same against a nominal rent. Are we supposed to pay GST on the same as it is for residential purpose?

[KASTURI SETHI]

Sh.Dinesh Mehta Ji, What is rent per month per employee ?

[Ashish Diwedi]

Rent is ₹ 1000 p.m. per employee

[KASTURI SETHI]

Such renting service for residential purpose is exempted vide Notification no.12/17-CT(R) dated 28.9.17 as amended up to 16.10.20 (serial no.12). There are decisions of AAR and AAAR to this effect. These quarters must not be used as guest houses. If some of quarters are to be used as guest houses, rent must be less than ₹ 1000/- (may be ₹ 999/- or further less) per unit. See serial no.13 of above notification.

[Vijay kumar]

Based on the facts provided, it is a taxable supply but is exempted vide sl.no.12 of Nofn.12/2017-CT Rate dt.28.6.2017.

12. Services by way of renting of residential dwelling for use as residence.

[Ganeshan Kalyani]

I agree with both the experts.

[Himansu Sekhar]

Kindly refer query I'd 112632

AI Summary

Renting of residential dwelling exempt under GST when provided as bona fide residence; guest house use can affect exemption status. Renting of a dwelling used by workers or employees as a residence is exempt under the relevant GST notification; this exemption applies to employer provided residential quarters when occupied as residences and not as guest houses. If quarters are used as guest houses, the residential dwelling exemption does not apply and treatment follows the separate notification entry for such accommodation, which conditions exemption on rents remaining below the specified threshold.