Residency in hostels and PGs in Karnataka to now be charged with 12% GST

The Authority for Advance Rulings (AAR) said in a ruling that GST (Goods and Services Tax)  exemption is not applicable on hostels and PGs (Paying Guests) as the services provided cannot be compared to renting.

Sri Sai Luxurious Stay LLP, a paying guest accommodation in Sanjayanagara, Bengaluru had sought an advance ruling stating that it was to be exempt from GST. GST was already applicable for hotels, campsites and clubs and now PGs and hostels have also been brought under its ambit. 

"Earlier Hostels were exempt because they were associated with outstation students using the facility for educational purposes and the charges were under Rs 1000 per month. But a recent ruling changed this because renting must be long term. Hostels are shared by multiple people. Invoices are being issued based on the number of beds. Therefore it cannot be covered under the definition of dwelling unit for residential purposes" said the Bengaluru bench.

The Lucknow bench of the AAR also filed a similar ruling against the V S Institute & Hostel Pvt Ltd based in Noida. 

Meanwhile, this became a trending topic on the internet. One user commented that someday GST will also be levied on the Dakshina (Donation) made in temples. Another commented that at least, Finance Minister, Nirmala Sitharaman does not stay in a hostel. 

12% GST on Hostal rent
Meanwhile Nirmala ji acts like this😁 pic.twitter.com/eFjNtLOWMb

— Rahul verma (@Rahulve84409520) July 30, 2023