Service tax on hostels

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This query is : Resolved

Maruthamuthu Kalaimani (Querist)

13 December 2012 Sir,

I am running ladies hostel. it is a partnership firm.
is service tax is applicable for hostels. if yes, please explain it

@VaibhavJ

@VaibhavJ (Expert)

13 December 2012 hi

The hostel service is not taxable as it is not meant for temporary stay of less than 3 months. Further the mess facility in the hostel meant for the inmates i.e students of the school, if run by your school itself, then it is not taxable. But if some other agency/ contractor is given the contract for running the mess then it will be taxable and will be construed as Outdoor Caterer's service subject to exemption of SSI limit and then if taxable the eligible abatement can be claimed.

refer here for more details:
https://taxguru.in/service-tax/service-tax-renting-immovable-property-include-hotels-hostels-boarding-houses-residential-house-property.html

Thanks//Vaibhav
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Maruthamuthu Kalaimani

Maruthamuthu Kalaimani (Querist)

03 April 2017 It is totally a private concern not connected with any colleges or schools. it also runs mess itself. Now please explain the provision of service tax

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

24 July 2025 Thanks for the clarification! Since your ladies hostel is a **private partnership firm** not connected with any educational institution and you run the **mess by yourself**, here’s how **service tax** applies:

### Service Tax on Hostel Services

1. **Renting of Immovable Property (Hostel Accommodation)**:

* The service of renting out immovable property for **residential purposes** (like hostels) is **exempt** from service tax **if the stay is for more than 3 months**.
* If you provide accommodation for **less than 3 months (temporary stay)**, then it falls under taxable “renting of immovable property” service.
* Since hostels generally accommodate students for **longer than 3 months**, service tax **does not apply** on the accommodation charges.

2. **Mess/Food Services**:

* If the hostel runs the **mess by itself** (i.e., you are not outsourcing to any catering agency), **service tax is generally not applicable** on this food service.
* Catering services by third parties (outsourced caterers) attract service tax under the category **Outdoor Catering Services**, subject to applicable exemptions and abatement.

### Summary for Your Case:

* **Accommodation charges:** No service tax (since it’s residential and for long term).
* **Mess charges:** No service tax (since mess is run in-house, not outsourced).

### Important:

* If your hostel ever offers **short-term accommodation (less than 3 months)**, then service tax on renting property will be applicable.
* If mess is outsourced, service tax liability arises on that catering service.

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If you want, I can help draft a more detailed note or guide you on compliance. Would you like that?

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