GST on hostel rent: The Goods and Service Tax (GST) Authority of Karnataka and Authority for Advance Rulings (AAR) said that rent paid for hostel and paying guest (PG) accommodation would now attract 12% GST.
In two separate orders, Karnataka GST Authority stated that hostel rent paid by occupants did not qualify for exemption from GST as it was not a ‘residential dwelling’.
According to reports, Srisai Luxurious Stay LLP, a company that manages and develops PG, hostel accommodations in Karnataka, filed an appeal before AAR saying hostel rent is like residential dwelling, so it should be exempted from GST.
After hearing Srisai Luxurious’s application the AAR administrated that the hostel rent is not equivalent to a residential dwelling and it would qualify for GST.
Currently, residential dwelling including hotels, inns, or guest houses which offers accommodations that costs not more than 1,000 a day, do not pay GST in Karnataka.
Students will pay more rent
The verdict is going to affect students or working professionals who reside in PG or hostels as the rent would go high. The registered hostels and PG would start collecting fees that include 12% tax.
