Relief for students, no GST on hostel fees less than Rs 1000 per day

Students across the country can now breathe a sigh of relief amid these testing times of the Covid-19 pandemic as GST on hostel fees has been relaxed to a large extent. The Maharashtra bench of the Authority for Advance Rulings (AAR) has ruled that hostel fees charged to students will attract zero goods and services tax (GST) if the rent per student is under Rs 1000 per day.

As per the ruling, the hostel fee below Rs 1000 per day per student will be subject to a ‘nil’ rate under Entry Number 14 of the GST June 2017 notification, according to a report in The Times of India.

In addition to this, the Central Board of Indirect Taxes and Customs (CBIC) in February 2018, had made it clear that GST won’t be levied on lodging fees that are below this prescribed monetary limit.

Background

As per Taxscan, the applicant, in this case, was Kolhapur-based Ghodawat Eduserve, which provides training and coaching services for students of standards 11 and 12 for various exams. In addition to that, they also provide hostel facilities to the students for an additional charge. The hostel charges are optional and cost a lump-sum annual fee of Rs 34,000 for every student, which comes to approximately Rs 95 a day.

Ghodawat Eduserve sought an advance ruling from the Maharashtra bench of AAR on the issue of whether the activity of providing hostel services is exempted from GST as the daily fee charged per student is much less than Rs 1000.

The AAR bench had to examine the definition of ‘residential dwelling’ as it was not specifically covered under the GST Act. The applicant benefitted from the wider definition under Entry Number 14. The bench members, Rajiv Magoo and TR Ramnani finally ruled that exemption under Entry Number 14 is applicable for services provided by hotels, inns, guest houses, or any such entity for residential or lodging purposes if the value of a single unit of accommodation is under or equal to Rs 1000 per day, Taxscan added.