GST on hostel / PG

[Ethirajan Parthasarathy]

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.

AI Summary

Reverse charge for renting of residential dwelling can make a tenant running hostel/PG liable for GST even if landlord not taxed.
A notification places liability on the registered recipient under the reverse charge mechanism for service by way of renting of residential dwelling to a registered person, so a tenant running a hostel/PG may need to pay GST under RCM even if a landlord is not liable under forward charge; the outcome depends on characterisation as residential or commercial, the recipient's registration status, and differing rulings and notifications.