GST Council Proposes Exemption on Accommodation Services for Students and Working Professionals
The 53rd GST Council meeting has recommended exempting accommodation services having a value of supply up to ₹20,000 per person per month from goods and services tax.
GstAccommodation ServicesCo LivingStudentsWorking ProfessionalsHostelsReal EstateJun 23, 2024
The exemption is subject to the condition that the accommodation service is supplied for a minimum continuous period of 90 days. This means that students and working professionals who stay in hostels or co-living spaces for more than 90 days will not have to pay GST on their accommodation costs.
Co-living space providers have welcomed the new notification, saying that it clarifies that hostels and accommodations for working professionals are exempt from GST within certain limits. This move provides much-needed clarity for operators and will reduce the burden on end customers, allowing them to save money on rentals.
However, there is still ambiguity regarding the GST paid to landlords on a reverse charge mechanism (RCM) for supplies taken by operators, which is unsustainable given the margins the operators make. Moving these rentals to an inclusive GST model would help operators survive and the market should change in this direction.
Tax experts point out that currently the services by way of renting for use as residential dwelling to an unregistered person for use as residence is exempt under GST. A residential dwelling generally does not include a hostel. However, in present days hostels can be equated with more than a residential dwelling as they have all the ingredients. Hence, the question was that incase residential dwelling services are exempted, why should hostel not be exempt, given the social considerations and India’s demographic landscape where youth needs to stay in hostels as a necessity.
The decision of the 53rd GST Council has clarified that all kinds of hostel services used for continuous stay of more than 90 days, including private hostels would be exempt if they charge not more than ₹20,000 per month. However, further clarification would be received on issuance of notification.
Frequently Asked Questions
What is the value of supply of accommodation services that will be exempt from GST?
Up to ₹20,000 per person per month
What is the minimum continuous period of stay required to avail the exemption?
90 days
Will GST be charged on accommodation services if the charges are more than ₹20,000 per month?
Yes, GST will be charged on the entire value
What is the current status of GST on residential dwellings?
Exempt under GST
What is the impact of the GST Council's proposal on co-living operators?
Provides much-needed clarity and will reduce the burden on end customers
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