Very recently Madras High Court has ruled that no GST is payable by the landlord who has let out his property to another entity (Tenant) for running a hostel. I presume the said decision holds good even if the tenant is using the place for running paying guest accommodation.
The tenant in the above circumstances must be filing his income tax return for running hostel or PG as business income. In this situation, whether the tenant is liable to pay GST under RCM tax even though no GST (forward) is payable by the landlord.
Landlords Leasing Property for Hostels Not Liable for GST; Tenant's Obligations Under Reverse Charge Mechanism Explored A recent Madras High Court ruling states that landlords leasing property for hostels are not liable for GST, raising questions about the tenant's GST obligations under the Reverse Charge Mechanism (RCM). The discussion highlights that if the tenant operates the property as a commercial entity, like a paying guest accommodation, they may be liable under RCM. However, the interpretation of GST laws is complex, with differing views and potential appeals. The legal community remains divided on whether such accommodations are commercial or residential, affecting GST applicability. The situation remains uncertain, complicating advice for clients. (AI Summary)
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