Rent paid for paying guest (PG) and hostel accommodations, which are not like residential dwellings, would attract 12 per cent goods and services tax (GST), the authority for advance rulings (AAR) in Karnataka has ruled.
The AAR, while hearing a case of Srisai Luxurious Stay LLP, said that only rent for residential dwellings would qualify for GST exemption.
There was earlier no GST on residential dwellings, as well as on hotels, inns, or guest houses where the rent is up to Rs 1,000 a day. However, the government issued a notification on July 13, 2002 to lift the GST exemption for hotels and guest houses, where rent is up to Rs 1,000 a day. The notification was effective from July 18 that year.
Srisai, which develops and manages PG accommodations and hostels in Karnataka, filed an application before the AAR and argued that since rent on these places is like that for residential dwellings, there should be no GST on it.
The authority observed that the applicant claims to take a residential dwelling on rent and then creates partitions and arranges cots that are let out. The company charges inhabitants in accordance with the number of people sharing a room.
The AAR found that as such the accommodation is not a residential dwelling, but a room shared by unrelated people. Besides, invoices are raised per bed on a monthly basis. These are not characteristics of residential dwelling, it observed.
The applicant admitted that the accommodation does not have individual kitchen facilities for each inhabitant and cooking is not allowed either. These are not essential characteristics of any permanent stay, the AAR observed.
(Author can be reached at info@a2ztaxcorp.com)
DISCLAIMER: The views expressed are strictly of the author and A2Z Taxcorp LLP. The contents of this article are solely for informational purpose and for the reader’s personal non-commercial use. It does not constitute professional advice or recommendation of firm. Neither the author nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon. Further, no portion of our article or newsletter should be used for any purpose(s) unless authorized in writing and we reserve a legal right for any infringement on usage of our article or newsletter without prior permission.
___________________________________________________________________________________
📢 FREE Webinar on “Blockchain and Virtual digital asset with overall taxation implications including GST” by CA Riddhi Jain & Adv (CA) Bimal Jain
 |
|
🔖 A2Z Academy is Organizing a FREE Webinar On: 📢“Blockchain and Virtual digital asset with overall taxation implications including GST” 🗓️ Date: August 04, 2023, Friday ⏰ Time: 8:00 PM to 9:00 PM (IST) 🎤 Speakers: 👨🏻🏫 CA Riddhi Jain 👨🏻🏫 CA (Adv) Bimal Jain Registration Link 🔗: https://zoom.us/webinar/register/WN_Kbvufgm6TyW-avGx6_3mfw Coverage: ✔️ What is the current legal status of virtual digital assets in India? Limited seats available Follow us on our social media for more updates: |