GST on Hostel and PG Services

GST for different services differs by some percentage. Deciding factors include:

1. Type of Service: Handling of long-term residential lodging is different from hotels and other short-term commercial stays.

2. Duration of Stay: GST is not applicable if the stay is 90 days or longer and the monthly rent is Rs.20,000 or less per person.

3. Who is the Service Provider: GST is also not applicable if an educational institution offers accommodation directly to its students.

How GST Impacts Your Hostel or PG Business?

Every accommodation business is required to factor in the 12% tax on the fees collected. The businesses must get their GST registration done, must do proper invoicing, documentation & timely filling of returns to avoid any kind of penalties.

•  GST registration: Whether a hostel or PG needs to register for GST depends on its turnover. If the aggregate turnover from taxable accommodation services exceeds ₹20 lakhs in a financial year (or Rs.10 lakhs in special category states), GST registration is required. On the other hand, a hostel that provides only exempt services, such as one run by an educational institution for its own students, does not need to register.

• Input Tax Credit (ITC): Hostel and PG service providers are eligible to claim Input Tax Credit (ITC). This allows them to get credit for the GST paid on various business-related expenses, such as furniture, housekeeping, repairs, and maintenance.

It is crucial to note that ITC cannot be claimed for any inputs or services used to provide exempt supplies.

Effect of GST on Students and Young Professionals in Hostels and PGs

The exemption of GST on tariffs of less than Rs.1,000 for a day is no longer applicable. This has increased the living cost of students and young professionals. It is thus essential that the accommodation provider must clarify whether the quoted rent is inclusive or exclusive of GST. Issuing tax invoices or receipts to the tenants while clearly indicating the GST charged is also essential as this serves as proof of payment and can also be used to claim ITC.

GST Rates on Hostel and PG Services

Exemptions form GST for special cases

Several special types of accommodations are exempt from GST. They include:

1. Educational Institutions: Colleges, universities, and schools which accommodate their own students are exempt from GST altogether.

2. Combination of Services: Depending on what is deemed to be the primary service (typically rent), GST may be applied if rent is combined with food, laundry, or other services.

What common GST compliance mistakes should I avoid?

To avoid common GST compliance mistakes, hostel and PG owners must ensure they have a valid GST registration and prominently display their GSTIN. It's crucial to issue proper tax invoices that include all necessary details like the GST amount.

Maintaining accurate records of all supplies, taxes collected, and Input Tax Credit (ITC) availed is essential. Furthermore, filing GST returns regularly and on time is a key requirement. Finally, staying informed about the latest GST notifications, circulars, and amendments helps prevent non-compliance issues.