GST on Hostel Rent & PGs

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The Authority of Advance Ruling (AAR) has declared that hostel accommodation will now attract a 12% GST.

The AAR’s ruling is based on hostels not being classified as residential dwelling units, resulting in them no longer qualifying for GST exemption.

As a result, students and other hostel residents will now be required to pay an extra 12% tax on their rent.

Government Lifts GST Exemption for Hostels

The ruling of charging GST on Hostel Rents and PGs was prompted by the government’s decision to lift the GST exemption for hotels and guest houses with daily rents up to Rs 1,000, which was in effect until July 17, 2022.

GST on Hostel Rent to Hit Students and Hostel Operators

  • The recent AAR ruling will increase the cost of living for students in hostels due to the addition of 12% GST to their rent.
  • The decision may negatively impact the hostel industry, leading to lower occupancy rates and potential profitability issues.
  • Furthermore, The AAR’s ruling states that rent paid by inhabitants of PGs and hostels does not qualify for GST exemption as it is not akin to renting residential dwellings for use as residences.
  • Additionally, the AAR has ruled that GST on reverse charge will apply to rental payments made by hostel operators to landowners.
  • Consequently, hostel operators must now obtain GST Registration as their services are subject to GST.

Take a call from Expert

GST on Residential Property Based on RCM

Moreover, If you want any other guidance relating to GST on Hostel Rent & PGs, please feel free to talk to our business advisors at 8881-069-069.

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