Bengaluru-based Srisai Luxurious Stay, which provides paying guest accommodation and service apartments, submitted that private hostels would be covered under the category of residential dwellings and hence be exempt from GST. Similarly, Noida-based V.S. Institute and Hostel, which serves students, submitted that it provides residential facilities including food, electricity, water and Wi-Fi. These would be covered under the definition of ‘residential dwelling’.
There is no GST levy if a ‘residential dwelling’ is rented for ‘the purpose of residence’ to GST-unregistered individuals (eg: salaried individuals, students and small business owners who are not required to register for GST, etc).
However, the AAR in both cases, distinguished a residential dwelling from a hostel. “A residential dwelling is an accommodation meant for permanent stay and does not include guesthouse, lodge or like places,” the AAR benches observed.
The Karnataka bench explained that the accommodation provided was not a residential dwelling, but a room. Unrelated people shared the same room and invoices were raised per bed on a monthly basis. No individual kitchen facility was made available . It also added that the various additional facilities such as vehicle parking, washing machine facility and television would not be bundled services as these are optional.