GST Applicability of Private Hostels

[ROHIT GOEL]

Respected experts,

W.e.f 18.7.2022, tax@12% has been levied on renting of accommodations for hotel/inn/guesthouse etc. Mr. A is running a private hostel wherein he is providing hostel rooms to students on annual contract basis (renewable at end of every year till completion of study of student). Before amendment, Mr. A is not charging any GST on hostel fees.

Hon'ble Karnataka HC recently in TAGHAR VASUDEVA AMBRISH VERSUS APPELLATE AUTHORITY FOR ADVANCE RULING, KARNATAKA , COMMISSIONER OF CENTRAL TAX BANGALORE, ASSISTANT COMMISSIONER OF COMMERCIAL TAXESLGSTO-90, BENGALURU = 2022 (2) TMI 780 - KARNATAKA HIGH COURT, W.P. No.14891 OF 2020 (T-RES) Dated: - 7-2-2022 held that such private hostels are covered under the category of residential dwellings and as such covered under Exemption Notification no. 12/2017 CGST(Rate) Entry no. 12. Similar decisions were also rendered under Service tax regime however contrary decisions have been made by some AARs under GST.

Your expert opinion is requested as to whether Mr. A shall rely upon High Court's decision and continue to be exempted from GST or start charging GST if a conservative approach is preferred?

AI Summary

Private Hostel GST Dilemma: Should Mr. A Charge 12% Tax or Seek Advance Ruling for Clarity? A discussion on the applicability of Goods and Services Tax (GST) to private hostels highlights a query about whether Mr. A, who runs a private hostel for students, should charge GST following a recent amendment imposing a 12% tax on accommodations. A Karnataka High Court decision classified such hostels as residential dwellings, exempting them under a specific notification. Experts suggest that Mr. A could seek an advance ruling for clarity, as AAR decisions are not binding. If the hostel operates on rented premises, paying GST under the reverse charge mechanism might be considered to offset GST on rentals.