Hostel Rent less than Rs.1000/- per day per student exempted under GST

Last updated: 10 September 2021

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The Maharashtra Authority of Advance Ruling (MAAR) has ruled on the GST exemption for hostel services provided by M/s. Ghodawat Eduserve LLP. The ruling clarifies that hostel facilities provided to students, when charged at less than Rs 1000 per day per student, are exempt from GST. This exemption falls under specific provisions related to lodging services, distinguishing it from residential dwellings.

Court :
Maharashtra Authority of Advance Ruling (MAAR)

Brief :
In M/s. Ghodawat Eduserve LLP [Order No. GST-ARA-72/2019-20/B-51 dated August 27, 2021], M/s. Ghodawat Eduserve LLP ("the Applicant") has sought clarification on the issue as to whether there lies any exemption on the service of providing hostel on rent to students under S no. 12 or S no. 14 of the Notification No. 12/2017- Central Tax (Rate) dated June 28, 2017 ("Services Exemption Notification") under GST.

Citation :
Order No. GST-ARA-72/2019-20/B-51 dated August 27, 2021

In M/s. Ghodawat Eduserve LLP [Order No. GST-ARA-72/2019-20/B-51 dated August 27, 2021], M/s. Ghodawat Eduserve LLP ("the Applicant") has sought clarification on the issue as to whether there lies any exemption on the service of providing hostel on rent to students under S no. 12 or S no. 14 of the Notification No. 12/2017- Central Tax (Rate) dated June 28, 2017 ("Services Exemption Notification") under GST.

The Hon’ble Maharashtra Authority of Advance Ruling ("MAAR") noted that the Applicant is providing facility of hostel by charging students Rs. 34,000/- per annum i.e. Rs. 95/- per day per room in addition to coaching fees. The contention put forth by the Applicant of covering the service under "residential dwelling" under S no 12 of the Service Exemption Notification is not satisfied as there lies no restriction of preparing own food, stay of family members and the food is not provided by the owners in residential dwellings. Such is not the case in the current hostel service provided by the Applicant.

Further noted, considering the clarification given in Circular No. 32/06/2018-GST dated February 12, 2018, the hostel facility provided to students can be included in the provisions of S no. 14 of the Services Exemption Notification which mentions Services by hotel, inn, etc., by whatever name called for residential or lodging purposes, thereby making the same exempt from taxes.

FAQ :

Yes, hostel facilities provided to students are exempt from GST if the rent is less than Rs 1000 per day per student, as per the ruling by the Maharashtra Authority of Advance Ruling.

The exemption for hostel services provided to students is covered under S. No. 14 of the Notification No. 12/2017-Central Tax (Rate), which pertains to services by way of hotel, inn, etc., for residential or lodging purposes.

Hostel services are not considered 'residential dwellings' under S. No. 12 of the exemption notification because they typically involve restrictions not present in residential dwellings, such as limitations on preparing own food or accommodating family members, and food is often not provided by owners in residential dwellings.

M/s. Ghodawat Eduserve LLP was charging students Rs 34,000 per annum, which equates to approximately Rs 95 per day per room.

The key condition for GST exemption on hostel rent for students is that the daily charge per student must be less than Rs 1000.

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Judgement posted by

Bimal Jain

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FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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