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 TAXES LGSTO-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

GST on private hostel accommodation: treat as exempt only if residential exemption applies; consider advance ruling or charge GST.
The document outlines the conflict between a High Court holding that private hostels qualify for the residential dwelling exemption under Exemption Notification no. 12/2017 CGST (Rate) and contrary AAR positions after an amendment expanding taxable accommodation categories; it recommends either seeking an advance ruling for certainty or, as a conservative alternative, charging GST and utilising reverse charge input credits where rental inputs attract RCM.