Authority of Advanced Ruling (AAR) in Karnataka has made students hostel accommodation little-bit expensive by imposing 12% GST on it. This clearly says that now students have to pay an extra 12% with their rent for hostels. Hostel, PGs, lodges don't come under residential dwelling, and therefore, it can't be exempt from Goods and Services Tax (GST).
Residential dwelling is for permanent stay and there are no GST charges for residential houses and apartments. But the same rule can't be continued in hostels case as there is no service of an individual kitchen. This decision came after the Karnataka based Srisai Luxurious Stay LPP case for GST exemption.
Within this there will be GST on a reverse charge of rental paid by hostel operators to landlords. Also, if any hostel provide services like TV and washing machine, there will be separate tax system for these as these are not bundled services.
This decision and new rules by AAR will have a major impact on the hostel industry, for sure.
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