The GST-Authority for Advance Ruling (GST-AAR), Karnataka bench, assessed the GST implications linked to renting residential spaces to students and working women, including the provision of various amenities.
Following a precedent set by GST-AAR in prior cases involving Srisai Luxurious Stay in Bengaluru and VS Institute and Hostel in Noida, the AAR determined that providing accommodation and services resembled that of a hostel or guest house, subject to a 12% GST.
Deeksha Sanjay, a proprietor renting residential dwellings with amenities, sought clarification on whether these rentals qualified for exemption under Entry No 12 of Notification No.12/2017 dated June 28, 2017. If not exempt, she wanted to know the applicable GST rate and whether input tax credit could be claimed for services provided.
Her business offered accommodations to students and working women every month with single, double, or triple occupancy rooms. These rooms were furnished with essential amenities and included meals, laundry, power backup, housekeeping, security, and drinking water.
The AAR’s assessment highlighted that the accommodations offered by the applicant resemble a unit of lodging in a paid guest house or hostel, rather than meeting the criteria of a residential dwelling. Additionally, essential facilities like food, furniture, appliances, cleaning, security, and pest control provided by the applicant are obligatory and not chosen by the resident.
These services are included in the monthly charges. Moreover, charges for electricity and water are fixed, not based on usage. Consequently, the services provided by the applicant constitute accommodation for residency rather than the rental of a residential dwelling. As a result, these services are subject to a 12% GST, though input tax credit(ITC) would be available.
It’s important to note that while advance rulings are binding on the applicant and tax authorities for the specific transaction, they also carry persuasive value for similar cases in assessment.
| Applicant Name | Ms. Deeksha Sanjay |
| Advance Ruling No. | KAR ADRG 34/2023 |
| GSTIN or User ID | 29EDMPS7850B1Z1 |
| Date | 16.11.2023 |
| Represented By | Sri Sanjay M Dhariwal |
| Karnataka GST AAR | Read Order |