GST on Accommodation Services
In our earlier times, if speak about taking accommodation services; the first thing which normally comes to our mind is that students taking hostel facility for their stay, but the above scenarios have changed in today’s era, despite digitalization there are many instances where even working professionals have to travel for short period; i.e. few months or more where staying hotel is not a viable option and taking any flat on rent is also a time-consuming task. The above situation warrants even professionals to take accommodation service in the hostel. When we talk about accommodation services it is important to know the applicability of GST, as a lot of confusion is going on in the market. The author would like to answer a few of them –
1. I will be going to Pune for 2 months, will be staying in PG, and will be paying the rent of 21,000/p.m. whether GST apply to me?
- Yes, GST is applicable in your case.
2. I have heard that GST does not apply to residential accommodation, then why there is a levy of GST?
- There was a levy of GST on residential accommodation, however, Government-wide Notification no. 04/2024, has inserted a new entry 12A which provides the cases where GST would be exempted-
- Monthly rent paid per person should not exceed 20,000/-
- The period of stay should be for a minimum period of continuous 90 days.
3. Is it necessary to satisfy both conditions or can I get an exemption even if one condition is satisfied? Suppose I stay for 90 days in intervals as I have to frequently travel, and in any case, my period of stay in a year would exceed 90 days.
- Yes, both conditions need to be satisfied. To answer the second question, the wording used in the entry for giving exemption is that the period of stay should be for a continuous period of 90 days. Further, the Government is not concerned with how many times you take the facility.
4 . If the law were so stringent that I could claim an exemption, then I would book the hostel for 90 days instead of 60 days and book in two people’s names instead of a single name. I have satisfied both conditions, so now I will claim an exemption.
- Any law should not only be understood in words but also spirit. By doing so, for the time being, you might satisfy the conditions for getting exemptions. But would be much bigger trouble when this arrangement for avoidance of tax comes in the knowledge of revenue.
- Willful nonpayment of Tax by suppressing the facts might result in the proceeding under section 74 of the CGST Act 2017.
Author’s View
- There might be a situation where the initial period of stay was initially decided more than 90 days, but due to some reason recipient vacated the room before 90 days let’s say after 70 days. In such a situation GST exemption would not be available, there is no question about it, but interest would also be applicable, which would be a hardship for the supplier.
- Accounting and another record-keeping task would also be required which would further add to compliance burden.
The views expressed are personal. The author may be contacted at cashubhamsawal@gmail.com, Mobile: 8888998239
The Copy of the Notification is as under:
