Hostel accomodation by Charitable Trust

Good question, CA Anand!

Here's how GST applies in this scenario:

GST on Rent/Lease of Residential Property to Charitable Trust for Hostel Accommodation

• Hostel accommodation by Charitable Trust: GST law exempts supply of hostel accommodation to students if the rent per day is ₹1000 or less (Notification No. 12/2017-Central Tax (Rate)).

• But what about rent/lease paid by Mr. X to the Trust?

  • When Mr. X leases out his residential property to the Charitable Trust, this is a rental service by Mr. X to the Trust.

  • GST on rent of residential property is generally exempt under GST (Entry 12 of Notification No. 12/2017-Central Tax (Rate)) if it is for residential purposes.

  • However, if the property is leased for commercial use (like running a hostel), the GST exemption may not apply on the rent paid by the Trust to Mr. X.

• Key point: The Trust provides hostel accommodation exempt from GST to students (end customers), but the rent paid by Trust to Mr. X may attract GST if the property is used commercially.

• The GST liability on rent depends on the purpose of use:

  • If the property is leased as residential accommodation, no GST on rent.

  • If it is leased for commercial purpose (hostel business), GST may be applicable on the rent payable by the Trust.

• Is the Trust registered under GST? If so, it can take ITC on GST paid on rent (if applicable).

Summary

So, Mr. X should evaluate the nature of use and consult if GST is to be charged on rent received from the Trust.