Page 70 - Knowledge Network Transform

CA. Naveen Khandelwal

GST & H3 (Hostels, Hotels, Hospitals)

Recent Amendments

GST known as the Goods and Service Tax came into Recent amendments have been brought by
effect from 1st July 2017. The Kelkar committee notifications and circulars issued in July and August
suggestions to have a common tax nationwide on 2022 as explained under:
goods and services was expected from a decade but
1. HOSTELS - Since the GST came there were
could become the reality only after the 101st
discussions about the taxability of renting of hostel
amendment to the Constitution of India. It has been
implemented after subsuming many central and rooms and leasing of the hostel buildings. Circular
No. 32/06/2018 of dated 12th February 2018
state indirect taxes like excise, VAT, CST etc. with one
clarified some issues related to hostels- one of
of the main objectives being reduction in multiplicity
of taxes leading to simplification, uniformity, and q u e st i o n s ra i s e d wa s w h e t h e r h o ste l
accommodation provided by Trusts to students is
elimination of double taxation.
covered within the definition of Charitable
Under GST, Supply is considered as a taxable event Activities and thus, exempt under Sl. No. 1 of
for levying tax. which includes supply of goods or
notification No. 12/2017-CT (Rate)
services or both. Section 7 of the CGST Act, 2017 read
Hostel accommodation services do not fall within
with Schedule II defines Supply and details out the the ambit of charitable activities. However, services
activities to be treated as Supply of goods or Supply
by a hotel, inn, guest house, club, or campsite, by
of Services. Different goods and services attract
whatever name called, for residential or lodging
different rates of GST and hence there is a need for purposes, having declared tariff of a unit of
bifurcation. The common activity of renting of rooms
accommodation below one thousand rupees per
or accommodation is done by these three sectors of
day or equivalent are exempt.
service industry- Hostels, Hotels and Hospitals.
Thus, accommodation service in hostels including
Since the beginning the taxability in these three by Trusts having declared tariff below one thousand
industries has always been under debate regarding
rupees per day is exempt as per serial number 14 of
the different issues, exemptions and rates. The
the notification no 11/ 2017.
complexities and the varieties of the activities
undertaken by these three sectors was also a reason Hostels cannot be equated with the hotels, inn, or
guest houses. This is a moot question, but the
for creation of such doubts.

68
001 A tax when cannot be c
The purpose of our lives is to be happy.ollected directly can never be collected indirectly.