PG/ Hostel Services not akin to renting of residential dwellings: AAR

The Authority of Advance Ruling (AAR Karnataka) in the matter of M/s. SRISAI LUXURIOUS STAY LLP has ruled out that PG/ Hostel Services not akin to renting of residential dwellings.

The applicant is a Limited Liability Partnership (LLP) firm under the provisions of the LLP Act 2008, having registered office at # 160, 5th Main, 4th Cross, NGEF Layout, Sanjay Nagar, Bengaluru-560094 and also having PAN number AEAFS6168R. They stated that they are into the business of developing, running, subletting and managing paying guest accommodation, service apartments, flats aimed to suit all types of customers by whatever name called.

The Questions and Ruling are as follows:

a. Whether PG/Hostel Rent paid by inhabitants qualify for GST exemption, since they are used as residential dwelling? Exemption entry No.12 of Notification No.9/2017 dated 28th September 2017.

Ruling: PG/Hostel Rent paid by inhabitants do not qualify for GST exemption under Sl No. 12 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as the services provided by applicant are not akin to renting of residential dwelling for use as residence.

b. Whether the charges collected towards allied additional services provided by the LLP would be considered as a bundled service along with the service of providing of Hostel/Paying guest?

Ruling: The allied additional services provided by the LLP are not naturally bundled services with the applicant’s Hostel/Paying guest accommodation service.

c. Whether GST on reverse charge will be applicable on the rental to be paid to the landowners?

Ruling: GST on reverse charge will be applicable on the rental to be paid to the landowners by the applicant as the services of the applicant are leviable to GST and thus the applicant has to obtain GST registration.

For Official Ruling Download PDF Given Below: