Madras HC says NO to GST on Hostel Room Rents

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GST Doctor on Wed Mar 27 2024


According to a recent news, Madras High Court has quashed order of Tamil Nadu AAR that had said hostels would be attracting 18% GST. In a notable ruling, Madras HC has held that hostels being used as residential purposes exempted to attract GST.

Madras HC Quashed Tamil Nadu order of AAR-

The ruling by Madras HC Judge Krishnan Ramasamy has quashed a decision by Tamil Nadu state Appellate Authority for Advance Ruling that had said that this would attract GST at the rate of 18%. In the ruling, Madras HC said that GST is not leviable on hostels as the end use comes under the purview of residential dwelling for the residence.

This Court is of the considered view that the issue of levy of GST on residential accommodation should be viewed from the perspective of recipient of service and from the perspective of provider, who offers the premises on rental basis.

Exemption of GST on accomodation of College students and Working Women-

Many writ petitions was filed on issue by private hostels for ladies providing residential accomodation and food to college going students and working women. Tax officials stated that renting for residential causes is exempt under GST but there remained confusion on the rent and therefore, exemption was not permitted. Madras HC ruling emphasises that exemption would be possible and this will be seen from the sight of service recipient rather than provider.

This ruling outlays important principles for determining GST rates and related exemptions. Hostels, PGs and other similar temporary stays have been seeking clarity on the issue for long; especially in light of the disputes raised by revenue authorities,

  • Abhishek Jain, Indirect Tax Partner & Head KPMG


In a nut shell, this article highlights that with the complexity involved, it will be gripping to see if the revenue authorities accept the verdict of HC or continue further litigation for final resolution in the Apex Court, according to Mr. Jain.

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