12% GST Applicable On Renting Residential Dwelling Units On Monthly Rental Basis: Karnataka AAR
The Karnataka Authority of Advance Ruling has held that 12% GST is applicable to renting residential dwelling units on a monthly rental basis.The bench of M.P. Ravi Prasad and Kiran Reddy has observed the renting of residential dwellings to students and working women for residential purposes, along with amenities and facilities such as food, furniture, appliances, cleaning, security,...
The Karnataka Authority of Advance Ruling has held that 12% GST is applicable to renting residential dwelling units on a monthly rental basis.
The bench of M.P. Ravi Prasad and Kiran Reddy has observed the renting of residential dwellings to students and working women for residential purposes, along with amenities and facilities such as food, furniture, appliances, cleaning, security, pest control, etc., on a monthly rental basis, as provided by the applicant, which is not exempted under entry No. 12 of Notification No. 12/2017-Central Tax (Rate) dated June 28, 2017.
The applicant, who is engaged in renting residential properties, argued for GST exemption under entry No. 12 of Notification No. 12/2017-Central Tax (Rate) dated June 28, 2017. They provided residential accommodation to students and working women, offering amenities such as food, furniture, appliances, cleaning, security, pest control, etc., on a monthly rental basis.
The applicant submitted that they charge the inhabitants monthly rent in accordance with the type of occupancy, along with annual maintenance charges of Rs. 4,000 per annum per person for double and triple sharing and Rs. 6,000 per annum per person for single occupancy, and also a refundable security deposit of Rs. 13,000 per person.
The applicant sought an advance ruling on the issue of whether renting a residential dwelling to students and working women for residential purposes, along with amenities and facilities such as food, furniture, appliances, cleaning, security, pest control, etc., on a monthly rental basis, is exempt under entry No. 12 of Notification No. 12/2017-Central Tax (Rate) dated June 28, 2017, or not. If the applicant transaction is not exempt, then what is the GST rate? If the applicant transaction is taxable, whether the applicant claims ITC on the input used for providing taxable service?
The AAR has noted that the applicant is providing accommodation services consisting of rooms or units without kitchens and with daily housekeeping services on a single or multi-occupancy basis, which thus merits classification under SAC 996311. The applicant is an establishment that provides services that are similar to those provided by hotels, inns, guest houses, clubs, and other similar establishments. The rent being charged per person per unit per day is less than rupees seven thousand five hundred, and thus the services covered under SAC 9963 attract 12% GST.
Advance Ruling No. KAR ADRG 34/2023