GST Implications in Case of Accommodation Service Pursuant to recommendations made in the 53rd GST Council Meeting

1. Amendment in Notification No. 12/2017-Central tax (Rate) 28 June 2017

Notification No. 4/2024 - Central Tax (Rate) dated 12 July 2024

Heading 9963 which also covered Accommodation services has been removed from Sl. No. 12 of Notification no. 12/2017. Also, a new explanation i.e. Explanation 2 is inserted in Sr. No. 12 of the said notification. Sr. No. 12 deals with exemption of services by way of residential dwelling for use as 'residence'.

The new explanation i.e. Explanation 2 reads as follows:-

Nothing contained in this entry shall apply to

a. Accommodation services for students in student residences;

b. Accommodation services provided by Hostels, Camps, Paying guest accommodations and the like."

Therefore, pursuant to the removal of heading 9963 and insertion of explanation 2, accommodation services provided by hostels can no longer take shelter under Sl. No. 12 by treating it as a residential dwelling. However, with insertion of Sl. No. 12A in Notification No. 12/2017, a threshold limit for exemption of accommodation service has been introduced. The said new entry reads as:

12A. Heading 9963, Supply of accommodation services having a value of supply less than or equal to twenty thousand rupees per person per month provided that the accommodation service is supplied for a minimum continuous period of ninety days.

In light of Notification No, 4/2024- Central Tax (Rate), which is effective from 15 July 2024, supply of accommodation service wherein the value of supply is less than or equal to INR 20,000/- per month per person subject to accommodation service provided for minimum continuous period of 90 days is exempt from GST in terms of Notification No, 12/2017- Central Tax (Rate).

2. Clarification with respect to taxability of accommodation service supplied during 1 July 2017 to 14 July 2024

Circular No. 228/22/2024-GST dated 15 July 2024

It is clarified that for the accommodation service supplied during 1 July 2017 to 14 July 2024, the entry 12A added in Notification No, 12/2017- Central Tax (Rate) shall apply i.e. the value of supply of accommodation service is less than or equal to INR 20,000/- per month per person and the same was supplied for a minimum continuous period of 90 days, is exempt.