In a major announcement, during the 53rd GST Council Meeting, Union Finance Minister Nirmala Sitharaman said that the council has exempted services by way of hostel accommodation outside educational institutions to the tune of Rs 20,000 per person per month. It is meant for students or working class and exemption can be availed only if the stay is up to 90 days.
“Hostels which are for students outside of educational institutions are also being exempted. The council has recommended exempting accommodation services having a value of supply up to Rs 20,000 per person per month. These services are supplied for a minimum continuous period of 90 days,” said the finance minister.
Commenting on the announcement, Ashish Deora, Founder and CEO, Aurum Ventures said, “India has shown a mature framework of policy conceptualisation, robust and swift implementation and a streamlined collection and distribution mechanism in our federal structure. The GST policy changes announced by Hon’ble Finance Nirmala Sitaraman, which focus on addressing operational challenges of small and large businesses, smoothing out administrative hurdles, a progressive legal dispute resolution mechanism implementation of technology and cognisance of consumer impact is a welcome move for consumers, enterprises and administration alike.
Bharath Bhaskar, Co-founder Settl. a Coliving operator said, “In recent years, the GST on residential dwellings has been a grey area. This new notification clarifies that hostels and accommodations for working professionals are exempt from GST within certain limits. This provides much-needed clarity for operators. However, in the long term, these should be classified as residential dwellings, thereby exempting them from GST without any limits. This change would reduce the burden on end customers, allowing them to save money on rentals. There is still ambiguity regarding the GST paid to landlords on a reverse charge mechanism (RCM) for supplies taken by operators, which is unsustainable given the margins the operators make. Moving these rentals to an inclusive GST model would help operators survive and the market should change in this direction.”
Sunny Garg, Co-founder, Crib said, “The GST council's recommendation to exempt GST on accommodation services charging up to Rs. 20,000 per month per person is a welcome move. This will benefit a large number of co-living companies, especially those in student housing segment, where monthly charges typically fall below this threshold across the country. Additionally, the eligibility condition requiring that the accommodation service be supplied for a minimum continuous period of 90 days can be easily met in the case of student co-living arrangements and hostels, which usually have longer lease or stay durations.
