Gst on private hostels , licenses required

This query is : Resolved

Payal Rathi (Querist)
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16 July 2019 Hi Experts,
Please help me out with the below matter-

Case : A Pvt. Hostel provides accommodation to college students alongwith their in-house Mess Facility. They charge total 8000 per month from each student (All inclusive of Room Rent, Mess, Parking, Electricity,etc.)

Query:
1. What will be the applicable GST in this case on a single bill of 8000 per month * 12 months to the hostel?
2. Will there be any special GST rates on Mess charges even if the hostel is not quoting it separately in their bill?
3. What Licenses and permissions are required to run a hostel (with a mess facility) of 100 Beds?
4. What are the possible Income tax benefits that we can avail in this case?

Rajesh Kumar

Rajesh Kumar (Expert)
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16 July 2019 Firstly we need to determine the nature of service- accommodation service or food service. It looks like a composite service, which predominant items being accommodation. As the charges of accommodation is less than Rs. 1000/- per day; GST is exempted. The department may take an objection that it is not a composite supply, but a mixed supply. To avoid dispute of that nature, we may opt to pay GST on mess charges @5%, without ITC.
License and permission for hostels depends upon the state/local laws as it is s state subject.
The person running the hostel may claim assessment under the presumptive scheme under Section 44AD of the Income Tax Act, if the turnover is less than 2 crores. For 100 seater hostel, it ought to be less than 2 Cr.

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