Karnataka AAR: Hostels Are Not Residential Dwelling Units No GST Exemption

The Karnataka Authority of Advance Ruling, AAR in the case observed and has held that the PG or the Hostel Rent paid by inhabitants does not qualify for GST exemption as the services are not akin to renting a residential dwelling for use as a residence.
The bench comprising of M.P. Ravi Prasad and Kiran Reddy T. in the case observed and has stated that GST on reverse charge will be applicable on the rental to be paid to the landowners.
Therefore, the applicant is an LLP and is in the business of providing guest accommodation or hostel services and are akin to guest house and lodging services.
The applicant in the case seek an advance ruling on the issue of whether PG or Hostel Rent paid by inhabitants qualifies for GST exemption since they are used as residential dwellings.
However, another issue is being raised by as to weather the charges which are collected towards allied additional services provided by the LLP would be considered a bundled service along with the service of providing a Hostel or Paying guests.
It has also been held by the AAR that the residential dwelling is a residential accommodation meant for a permanent stay and does not include a guest house, lodge, or similar places.
The AAR in the case observed and has stated that the accommodation services which are being offered by hotels, clubs, campsites, etc., with charges up to Rs 1,000 per day, were eligible for GST exemption until 17.07.2022.
Further, the AAR held that the allied additional services provided by the LLP are not naturally bundled with the hostel of the applicant’s or paying guest accommodation service.
Srisai Luxurious Stay LLP: the name of the Applicant.