Gst on private hostel
This query is : Resolved
30 April 2018
Dear Experts,
Can you please help me decide on the following matter.
Facts of the case:
• A hostel service agreement has been signed between a Private Hostel (Hostel Owner) and a Skill Development training Company (Training Company).
• Training Company is running a Govt Funded Skill Development training program wherein the company need to provide Boarding & Lodging facility to students undergoing training.
• Training company has signed an agreement with Hostel owner wherein hostel owner will provide Boarding & Lodging services to the Students of Training Company.
• Hostel Owner will charge Rs. 6000 Per Month per student to Training Company which is equivalent Rs. 200 per Day
• Hostel Owner will raise invoice on monthly basis to training company on the basis of number of students stayed in the particular month and the company will make payment to Hostel Owner.
Now taking into consideration the below lines from GST ACT and the above points, Should the Hostel Owner charge GST to the Training Company.
Under the GST Law, "services by a hotel, inn, guest house, club or campsite, by whatever name called, for residential or lodging purposes, having declared tariff of a unit of accommodation below 1000 rupees per day or equivalent is exempted from GST.
Can you please help me decide on the following matter.
Facts of the case:
• A hostel service agreement has been signed between a Private Hostel (Hostel Owner) and a Skill Development training Company (Training Company).
• Training Company is running a Govt Funded Skill Development training program wherein the company need to provide Boarding & Lodging facility to students undergoing training.
• Training company has signed an agreement with Hostel owner wherein hostel owner will provide Boarding & Lodging services to the Students of Training Company.
• Hostel Owner will charge Rs. 6000 Per Month per student to Training Company which is equivalent Rs. 200 per Day
• Hostel Owner will raise invoice on monthly basis to training company on the basis of number of students stayed in the particular month and the company will make payment to Hostel Owner.
Now taking into consideration the below lines from GST ACT and the above points, Should the Hostel Owner charge GST to the Training Company.
Under the GST Law, "services by a hotel, inn, guest house, club or campsite, by whatever name called, for residential or lodging purposes, having declared tariff of a unit of accommodation below 1000 rupees per day or equivalent is exempted from GST.
30 April 2018
Hostel owner has to prove that his per room tariff value was less than 1000/day. exemption upto tariff value of rs1000per room per day is provided under gst.
01 May 2018
5% GST applicable on Boarding charges and lodging charges exempt as it is less than 1000 per day.
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01 May 2018
Dear Experts,
Thanks for your Reply.
I have a small doubt. can GST Officials deny exemption in this case on the ground that the payment of Boarding & Lodging services is made by a company and not by the students who are staying in the hostel.
Thanks for your Reply.
I have a small doubt. can GST Officials deny exemption in this case on the ground that the payment of Boarding & Lodging services is made by a company and not by the students who are staying in the hostel.
01 May 2018
No they can't deny the exemption.
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14 July 2020
CA R Seetharaman ji can you provide the notification under which Hostel Charges including food or you can say including Boarding and Lodging charges are exempt from payment of GST on which base you are saying that Boarding Charges are taxable @5% and Lodging Charges are exempt?
14 July 2020
Circular 28/02/2018-GST dated 8th January 2018 and corrigendum dated 18th January 2018
14 July 2020
Consequent to the decisions of 28th GST Council Meeting held on 21.07.2018, the contents of the Circular No. 28/02/2018-GST dated 08.01.2018 as amended vide Corrigendum dated 18.01.2018 have been incorporated in S]. No. 7 (i) of the Notification No. 13/2018-Central Tax(Rate), dated 26.07.2018 amending the Notification No. 11/2017-Central Tax (Rate) dated 28th June 2017.
Also, the contents of the Order No 02/2018-Central Tax dated 31.03.2018 have been incorporated in Sl. No. 7(ia) of the Notification No. 13/2018-Central Tax(Rate), dated 26.07.2018 amending the Notification No. 11/2017-Central Tax (Rate) dated 28th June 2017.
Also, the contents of the Order No 02/2018-Central Tax dated 31.03.2018 have been incorporated in Sl. No. 7(ia) of the Notification No. 13/2018-Central Tax(Rate), dated 26.07.2018 amending the Notification No. 11/2017-Central Tax (Rate) dated 28th June 2017.
14 July 2020
Thanks Sir for your quick reply. These circulars/notifications are in my knowledge and as per these the renting services provided by a Hostel are exempt but Hostel is also providing Food to the occupants and charges are included in rent charges. So according to me it becomes a composite or mixed supply and taxable at higher rate of tax so in this case total supply becomes taxable @5% without ITC or @18% with ITC. What do you advice in such case? Is it a normal supply or composite supply?
14 July 2020
What about if an Institution is providing Hostel and mess services @6000/- PM per student to the students of other institution??
14 July 2020
5% GST applicable on food and no GST on accommodation provided.
No GST on room rent less than 1000 per day.
No GST on room rent less than 1000 per day.
15 July 2020
Sir when the hostel is charging a fixed amount of Rs.6000/- PM per Student including boarding and lodging then it becomes a composite supply and then how can you charge GST separately on Food and exempt on rent?? Please explain with notification details.
Moreover What about if an Institution is providing Hostel and mess services @6000/- PM per student to the students of other institution??
Moreover What about if an Institution is providing Hostel and mess services @6000/- PM per student to the students of other institution??
15 July 2020
Please go through AAR.
The Appellant is stated to be the owner of a private boarding house and is providing services of lodging and food exclusively to the students of St. Michael’s School, a secondary school run by a Charitable Society, namely the Sunshine Educational Society. The Appellant sought an advance ruling under section 97 of the West Bengal Goods and Services Tax Act, 2017/ the Central Goods and Services Tax Act, 2017, (hereinafter collectively referred to as “the GST Act”) on the following question:
(i) Whether or not services provided by the Appellant to the students of lodging and supply of food is a composite supply within the meaning of Section 2(30) of the GST Act.
(ii) Whether supply of such service is eligible for exemption under Si. No. 14 of Notification No. 12/2017—CT (Rate) dated 28/06/2017 (hereinafter referred to as the ‘Exemption Notification’).
(iii) The rate of tax applicable for the combination of services provided, if it is not considered a composite supply.
3. The West Bengal Authority for Advance Ruling (hereinafter referred to as the WBAAR’) has passed an advance ruling by an order dated 26.02.2019, wherein it has been pronounced inter alia that the Appellant is offering several individual services in two different combinations to the recipients, depending upon their need for lodging facility. None of the combinations of services being offered is a composite supply, as defined under Section 2(30) of the GST Act but are mixed supplies within the meaning of Section 2(74) of the GST Act and therefore taxable in accordance with Section 8(b) of the GST Act. The services being mixed supplies, value of the entire combination of services offered by the Appellant is taxable at the applicable rate.
The Appellant is stated to be the owner of a private boarding house and is providing services of lodging and food exclusively to the students of St. Michael’s School, a secondary school run by a Charitable Society, namely the Sunshine Educational Society. The Appellant sought an advance ruling under section 97 of the West Bengal Goods and Services Tax Act, 2017/ the Central Goods and Services Tax Act, 2017, (hereinafter collectively referred to as “the GST Act”) on the following question:
(i) Whether or not services provided by the Appellant to the students of lodging and supply of food is a composite supply within the meaning of Section 2(30) of the GST Act.
(ii) Whether supply of such service is eligible for exemption under Si. No. 14 of Notification No. 12/2017—CT (Rate) dated 28/06/2017 (hereinafter referred to as the ‘Exemption Notification’).
(iii) The rate of tax applicable for the combination of services provided, if it is not considered a composite supply.
3. The West Bengal Authority for Advance Ruling (hereinafter referred to as the WBAAR’) has passed an advance ruling by an order dated 26.02.2019, wherein it has been pronounced inter alia that the Appellant is offering several individual services in two different combinations to the recipients, depending upon their need for lodging facility. None of the combinations of services being offered is a composite supply, as defined under Section 2(30) of the GST Act but are mixed supplies within the meaning of Section 2(74) of the GST Act and therefore taxable in accordance with Section 8(b) of the GST Act. The services being mixed supplies, value of the entire combination of services offered by the Appellant is taxable at the applicable rate.
15 July 2020
Sir first of all I would like to say that AAR is not the law of land and if it is then its applicable only in that particular State other State Authorities are not bound by it. Secondly in this AAR as you have mentioned
that the Appellant is offering several individual services in two different combinations to the recipients, depending upon their need for lodging facility.
No doubt combination of services is a sort of package prepared according to the need of the recipients and there may be a mixture of different supplies but in Composite Supply we can not segregate the services as in the case of providing Hostel service to student which includes Food, use of washrooms, electricity, water etc. other necessary allied services directly related with Hostel Service and that too on a fixed monthly or daily charge. No separate charge for different allied services. In this case its a composite service and what will be the tax treatment in this condition where there is a consolidated charge for principal service and other allied services. Moreover please also check the corrigendum dated 18/01/2018 in this reference.
that the Appellant is offering several individual services in two different combinations to the recipients, depending upon their need for lodging facility.
No doubt combination of services is a sort of package prepared according to the need of the recipients and there may be a mixture of different supplies but in Composite Supply we can not segregate the services as in the case of providing Hostel service to student which includes Food, use of washrooms, electricity, water etc. other necessary allied services directly related with Hostel Service and that too on a fixed monthly or daily charge. No separate charge for different allied services. In this case its a composite service and what will be the tax treatment in this condition where there is a consolidated charge for principal service and other allied services. Moreover please also check the corrigendum dated 18/01/2018 in this reference.
15 July 2020
I don't agree with you it's a composite service.
If you want you can charge 5% GST on full value.
If you want you can charge 5% GST on full value.
15 July 2020
Please give your reason for disagreement. Why its not composite supply and a mix supply?
16 July 2020
Renting services provided by a Hostel are exempt. Why you want to include such services under composite service and pay tax on it when there's AAR favouring it.
17 July 2020
Sir I am agreed with the view that renting service by a hostel is exempt if the rental tariff is less than 1000/- per day. Moreover I don't want to include other services with Renting service of Hostel and nor I am interested in this but see the query what does it says? I am reciprocating below:-
Training company has signed an agreement with Hostel owner wherein hostel owner will provide
Boarding & Lodging services to the Students of Training Company. • Hostel Owner will charge Rs. 6000 Per Month per student.
Please note that hostel owner will charge 6000/- per student as per agreement and agreement is composite for Boarding and Lodging both and rate is also fixed for both so as per GST Act it is an agreement for composite supply of service that is for BOARDING and LODGING.
So its not me who is trying to mix or interested in making it composite. Its the agreement between the parties and in the light of agreement I am talking about that its a composite supply while you are trying to divide the services between Rent and Food.
Training company has signed an agreement with Hostel owner wherein hostel owner will provide
Boarding & Lodging services to the Students of Training Company. • Hostel Owner will charge Rs. 6000 Per Month per student.
Please note that hostel owner will charge 6000/- per student as per agreement and agreement is composite for Boarding and Lodging both and rate is also fixed for both so as per GST Act it is an agreement for composite supply of service that is for BOARDING and LODGING.
So its not me who is trying to mix or interested in making it composite. Its the agreement between the parties and in the light of agreement I am talking about that its a composite supply while you are trying to divide the services between Rent and Food.
18 July 2020
Divide and save the tax else pay 5% GST on entire amount.
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