SIGN IN SUBSCRIBE

News Update

Wrong RoadST - Whether any service is used for personal consumption or not is certainly question of fact and being question of fact, no substantial question of law arises: HCGovt proposes to amend Geographical Indication of Goods Rules; Draft issued for feedbackST - If what has been paid as tax is without authority of law, Revenue should refund the same - Denial of credit would result in the whole exercise being tax neutral: HCWarehousing Authority notifies several agri goods to be stored in only registered warehousesST - Even if the petitioner may have a case on merits, it is best left to be decided by the Appellate Authority under the hierarchy prescribed under the FA, 1994: HCUS FDA okays Eli Lilly Alzheimer’s drugGST - Petitioner challenges jurisdiction of assessing officer - Petitioner is entitled to file an appeal u/s 107 by availing an alternate efficacious remedy: HCFive from Telangana killed in car accident on Pune-Solapur HighwayGST - Existence of an alternative remedy is a material consideration but not a bar to the exercise of jurisdiction: HCHush money case against Donald Trump - Sentencing deferred to Sept 18GST - It is open to a trader to take goods by whichever route he opts, unless the law otherwise requires, destination point being intact: HCDeadly hurricane Beryl smashes properties in JamaicaGST - Conclusion that taxable person is providing a service to supplier while taking the benefit of a discount by facilitating an increase in the volume of sales of such supplier is ex facie erroneous and contrary to the fundamental tenets of GST law: HCIsrael claims 900 militants killed in Rafah since May monthGST - Order expressly records that personal hearing notice was returned with endorsement 'no such person at address' - Since petitioner has shifted to a new premises, it is just and necessary to provide an opportunity to contest demand: HC116 die in stampede at UP ’Satsang’I-T- Application for revision of order dismissed in limine on grounds of delay; case remanded for re-consideration: HCWe are deepening economic ties with India, says US officialI-T- As per Section 119(2)(b), power to condone applications relate to claims for amount exceeding Rs 50 lakhs are to be considered by CBDT; however it is impermissible for CBDT to pass order on merits: HC8 Dutch engineers build world’s longest bicycle - 180 feet, 11 inchesI-T- Additions framed u/s 68 for unexplained income & u/s 69 for unexplained expenditure not tenable where complete transactional details are furnished & not doubted: HCRailways earns Rs 14798 Crore from Freight loading in June monthI-T- Delay in filing ITR is per se insufficient reason to estimate assessee's profit @15% on turnover, more so where audited financial report is filed in timely manner: ITATMoD inks MoU to set up testing facilities in Unmanned Aerial System in TN Defence Industrial CorridorI-T- For invoking section 69A, assessee should be found to be owner of any money, bullion, jewellery or other valuable article & which is not recorded in the books of account: ITATGovt proposes Guidelines for ethical approach to Coal MiningI-T- TDS credit can be allowed based on AIS, where details pertaining to TDS, advance tax & other payments are reflected in Form 26AS: ITATVaishnaw to inaugurate Global IndiaAI Summit 2024I-T- Lending money with the primary intention of earning interest can be considered a business activity, but nature and manner of lending, as well as the frequency, should be taken into account: ITAT
 
Should students pay GST on Hostel rent?

DECEMBER 06, 2022

By CA Pritam Mahure & CA Sajana Kumavat

FOR small town students, tier-I/ tier-II cities provide better opportunities for education. However, for such students, the first hurdle is to find a place to stay,at cheapest cost, in such cities.

Colleges provide hostels but the same are not enough to meet the ever-rising demand. Also, residential apartments are available, however, majority of students can't afford the same. So, most are left with hostels(mostly run by charities , welfare institutions etc).

What is the issue of GST on hostels?

Sr. No. 14 of Not. No. 12/2017-CTR provided for Nil tax rate to Services of heading 9963 viz. "Services by a hotel, inn, guest house, club or campsite, by whatever name called, for residential or lodging purposes, having value of supply of a unit of accommodation below or equal to one thousand rupees per day or equivalent"

Aforesaid Sr. No. 14 was omitted vide Not. No. 3/2022-CT (R) w.e.f. 18.07.2022.

Resultantly,most students who seek such hostel facilities are confused as to whether they are required to pay GST to hostels.

What GST law says in this regard?

Although aforesaid sr. no. 14 is withdrawn, yet insofar as student's hostel accommodation is concerned, another exemption entry can be explored i.e. sr. no. 12 of Not. No. 12/2017-CT (R).

Sr. no. 12 of Not. No. 12/2017-CT (R) provides Nil tax rate to services of heading 9963 or heading 9972 viz. “Services by way of renting of residential dwelling for use as residence except where the residential dwelling is rented to a registered person”.

It can be observed that exemption under aforesaid sr. no. 12 is available subject to fulfilment of following two conditions:

a. Property should be a 'residential dwelling'

b. It should be used for 'residence' [but not by a registered person]

What is meant by 'residential dwelling'?

It may be noted that the term 'residential dwelling' is not defined in the GST Legislation.

The term 'Residential' is stated to mean 'reside', 'residing, 'residence' etc. Further, as regards the term 'Dwelling', it refers to inhabit; to reside; to remain; (Concise Law Dictionary – P Ramanatha Aiyer – 3rd edition ).

Thus, as students 'reside' in a hostel, the hostel can be said to qualify as a 'Residential dwelling'.

Even the CBIC in its erstwhile Service Tax Educational Guide clarified that, 'the phrase 'residential dwelling' has not been defined in the Act. It has, therefore, to be interpreted in terms of the normal trade parlance as per which it is any residential accommodation, but does not include hotel, motel, inn, guest house, camp–site, lodge, house boat, or like places meant for temporary stay' .

Is hostel for a 'temporary stay'?

It may be noted that, ordinarily, students stay in a hostel for around a year or more till completion of their course and the rental charges for hostels are mostly collected annually in advance.

Typically, in a hostel, student pays and stays for the duration of his course. Thus, hostel accommodation, which is for around a year, can be stated as not a temporary stay.It needs mention that rental agreements for 'residential apartments' (which qualify as 'residential dwelling') are, typically, for eleven months and extendable.

Given the aforesaid, as the students 'reside' in a hostel for a year or more, the exemption under 'residential dwelling' can be stated as available.

Prayer for clarity!

Although the aforesaid analysis makes it clear that the exemption for such hostel facilities continues under a different entry in the notification, yet, for benefit of students and their parents, a suitable clarification by CBIC would be a godsend!

(The authors are Founder and CEO, PMA, Assistant Manager, PMA. Mr. Yashodip Sakhare from PMA also contributed to the article.)

(DISCLAIMER : The views expressed are strictly of the author and Taxindiaonline.com doesn't necessarily subscribe to the same. Taxindiaonline.com Pvt. Ltd. is not responsible or liable for any loss or damage caused to anyone due to any interpretation, error, omission in the articles being hosted on the site)

 RECENT DISCUSSION(S) POST YOUR COMMENTS
   
 
Sub: Should students pay GST on Hostel rent

My observations are:
1. Amendment notification no.3 referred in the Article must be 4/2017-Central Tax (Rates) dt.18/07/2022.

2. In case of an eligible educational institution providing hostel accommodation to its students can claim exemption vide sl. no.66 of N. No.12/2017-Central Tax (Rates) dt.28/06/2017.

Posted by Suryam CV CA
 

TIOL Tube Latest

TIOL Tube
India's Path to Becoming a Superpower: An Interview with Pratap Singh

TOP NEWS


AR not Afar by SK Rahman

VISION 360



Shri Ram Nath Kovind, Hon'ble 14th President of India, addressing the gathering at TIOL Special Awards event.

TII LATEST

TIOLCORPLAWS LATEST