GST on hostel accommodation services have undergone some changes from July,2022. Withdrawal of gst exemption in accommodation under gst is going going to take effect from 18.07.2022. If accommodation charges in hotels, , inn, guest house, club or campsite is up to Rs 1000 per day, then it is exempt till 17.07.2022. But w.e.f. 18.07.2022 this exemption has been withdrawn. This article is going to focus on technical analysis of this withdrawal of exemption and impact on relevant industries .
GST exemption on accommodation before 18.07.2022
First lets understand where and what exemption was available in gst on accommodation in hotels. No GST was applicable on hotel accommodation if hotel room rent below Rs 1000 or up to Rs 1000.
Exemption was available in Sr No 14 of Notification 12/2017 Central Tax (Rate)
Exemption para in this Sr No was as under
“Services by a hotel, inn, guest house, club or campsite, by whatever name called,
for residential or lodging purposes, having value of supply of a unit of
accommodation below or equal to one thousand rupees per day or equivalent.”
From above para in Sr No 14 of the Notification 12/2017 Central Tax (Rate), we can say that exemption was available in accommodation is as under
- Accommodation by Hotels for value up to Rs 1000 per day (gst on hotel bill below 1000 or Rs 1000)
- Accommodation by club for value up to Rs 1000 per day
- Accommodation by in for value up to Rs 1000 per day
- Accommodation by guest house for value up to Rs 1000 per day
- Accommodation by campsite for value up to Rs 1000 per day
Examples
Suppose Mr A books hotels for two days. Hotel rent per day is Rs 800. So total rent for accommodation is Rs 1600. The question is that weather exemption is available or not?
Answer is its exempt as accommodation value is within limit of Rs 1000 per day. This exemption is up to 17.07.2022
There was a question whether this exemption was available to gst on hostel rent?. There was a Circular No. 32/06/2018-GST and it was clarified that this exemption will be available to hostels also.
So we can say that exemption of accommodation for charges up to Rs 1000 per day was available to hostels also
GST on hotel rooms 2022
Withdrawal of exemption of accommodation w.e.f. 18.07.2022
Latest GST notification 2022. Notification 04/2022 Central Tax (Rate) dated 13.07.2022 has been issued for removal of entry number 14 of Notification 12/2022 Central Tax (Rate) and this removal comes in to existence w.e.f. 18.07.2022
So 04/2022 Central Tax (Rate) is gst on hotel rooms 2022 notification
That means exemption para for accommodation services of charges up to Rs 1000 per day by hotels, club, campsite etc has been removed w.e.f. 18.07.2022.
So all hotels, club, campsite, hostels will have to pay gst on accommodation charges even if its value is within Rs 1000 per day. In short, now there is no any accommodation exemption in hotels, club, campsite, hostels etc.
New GST rate on accommodation services w.e.f. 18.07.2022
GST rate change in Hotels
As we have seen above, exemption on accommodation services provided by hotels was exempt if value of such accommodation by hotels is up to Rs 1000 per day. In other words we can say that GST on hotel room rent is exempt if such room rent is equal to Rs 1000 or below Rs. 1000. But as now this exemption has been withdrawn, the question is that what will be GST rate on accommodation charges by hotels?
Rates on various services have been given in Notification 11/2017 Central Tax (Rate). GST on hotel services is also covered in this notification
GST on hotel rooms notification/gst on hotel rooms 2022 notification/gst on hotel rooms
Clause i of Sr No 7 of Notification has been amended and its mention that 12% GST rate would be applicable for accommodation value up to Rs 7500 per day per unit.
So it is clear that, on one side exemption on accommodation services for value up to Rs 1000 per day per unit has been withdrawn (Sr No 14 of Notification 12/2017 Central tax removed) and on the other side the same has been brought in GST rate slab of 12% (Clause i of Sr No 7 of Notification 11/2017 Central Tax Rate has been amended).
Kindly note that gst on hotel rooms above 1000 per day per unit was already there. Detailed information in table form given in subsequent para in this article.
GST rate changes on accommodation other than hotels
As we have seen above, exemption on accommodation services provided by club, campsite, hostels was exempt if value of such accommodation by such accommodation is up to Rs 1000 per day. But as now this exemption has been withdrawn the question is that what will be GST rate on accommodation other than hotel accommodation?
As we have seen above rates of various services have been given in Notification 11/2017 Central tax.
Sr No 7 of the said notification contains rates for accommodation services
Clause i of Sr No 7 of Notification is for accommodation services by Hotels which have already been discussed above and Clause No vi of Sr No 7 is for accommodation services other than hotels.
Kindly note that there is 18% GST in clause vi of Sr No 7 of Notification 11/2017 Central tax (Rate) and there is no change even on or after 18.07.2022 in this said clause.
That means all accommodation services other than hotels are straight away subject to 18% GST.
So it is clear that, on one side exemption on accommodation services for value up to Rs 1000 per day per unit has been withdrawn (Sr No 14 of Notification 12/2017 Central tax removed) and on the other side the such accommodation services other than hotels are subject to 18% GST (clause vi of sr No 7 of Notification 11/2017 Central Tax Rate)
GST rates on accommodation services w.e.f 18.07.2022
Lets understand GST rates on accommodation services in simple manner in table form as under
hotel room tax slab 2023
| Nature of Service | GST Rate up to 17.07.2022 | GST rate w.e.f. 18.07.2022 |
|---|---|---|
| Hotel Accommodation services having value up to Rs 1000 per day per unit | Exempt | 12% |
| Hotel Accommodation services having value exceeding Rs 1000 but up to Rs 7500 per day per unit | 12% | 12% |
| Hotel Accommodation services having value exceeding Rs 7500 per day per unit | 18% | 18% |
| Accommodation other than hotels having value up to Rs 1000 per day per unit | Exempt | 18% |
| Accommodation other than hotels having exceeding Rs 1000 per day per unit | 18% | 18% |
Hotel gst rate slab 2023,
Impact of new GST rate on hotel industry w.e.f. 18.07.2022
GST on hotel accommodation is already there since introduction of gst. But GST rates slabs have been notified for accommodation. Accommodation for value up to Rs 1000 was exempt as we discussed aforesaid. But now new GST rate of 12% would be applicable for hotel accommodation having accommodation charge up to Rs 1000 even.
This new gst rate on hotel room rent not exceeding Rs 1000 will impact many small hotels. There are many small hotels in the nation having tariff value not exceeding Rs 1000 per day per unit. Normally small or medium class people take stay in such hotels and now such people will have to bear extra cost of GST @12% on room rent paid by them to hotels. This is impact of gst on hotel industry
Impact of new GST rate on guest house charges w.e.f 18.07.2022
Al most majority of guest houses are charging accommodation having value up to Rs 1000 per day per unit. So there is no gst on guest house charges up to 17.07.2022. But now w.e.f. 18.07.2022 gst on guest house accommodation also will be applicable @18%. So gst on guest house room rent will be 18% now. So many guest houses now will have to take registration in GST and GST on guest house room rent will have to be paid by them. gst rate on guest house services
Impart of new GST rate on hostels w.e.f. 18.07.2022
This change is going to impact many needy students staying hostels
There are many hostels in the nation, which provides accommodation services to financial backward students at very concessional rate. These hostels are established by trust with objective of providing accommodation services to students who are coming from poor financial background.
As the charges of such hostels are absolutely up to Rs 1000 per day per unit and therefore this hostels were availing the benefit of exemption and was not charging any GST on accommodation bills issued to such needy students. So students are not supposed to pay GST in hostel charges till 17.07.2022. Many educational institutions also providing hostel services to their students and up to 17.07.2022 there is no gst on hostel services provided by educational institutions as rent per day per unit remains within Rs 1000.
But now from 18.07.2022 such hostels are under obligation to charge GST on accommodation value and this burden of GST finally will be on shoulders of such students who are coming from vary poor financial background. I have seen that parents of many such students are just simply farmers or laborer. Now colleting 18% GST from such students will impact to ultimately education. GST on pg hostel is having the same story
On one side government is promoting the education and literacy in the nation and on the other side 18% GST is collected from students studding in hostels. So I personally appeal to to government to look in to the matter and remove the gst on accommodation services by hostels
FAQs
Is GST applicable on hostel fees?
Till 17.07.2022 there was exemption in accommodation fees of hostel if such fees is within limit of Rs 1000 per day. Normally in majority cases hostel fees can not exceed Rs 1000 per day. So we can say that exemption was available to hostel fees. But now this exemption has been withdrawn w.e.f 18.07.2022. So from 18.07.2022 GST @18% will be applicable on hostel fees.
Is there GST on hotel accommodation?
Yes, there is GST on hotel accommodation.
GST rate on hotel accommodation up to 17.07.2022
Accommodation charge not exceeding Rs 1000 per day per unit exempt in GST
Accommodation charge exceeding Rs 1000 but up to Rs 7500 per day per unit is subject to 12% GST
Accommodation charge exceeding Rs 7500 per day per unit is subject to 18% GST
GST rate on hotel from 18.07.2022
Accommodation charge not exceeding Rs 7500 per day per unit is subject to 12% GST
Accommodation charge exceeding Rs 7500 per day per unit is subject to 18% GST
Removal of exemption from 18.07.2022
One can observe from the above answer that this exemption of GST for value up to |Rs 1000 per day per unit for hotel accommodation charges has been withdrawn with effect from 18.07.2022
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Gst on affordable housing of works contract is now 18%
Is impacting very bad sign
Govt.should thik over this
Yes absolutely. Government should help in providing cheap Accomodation, rather they are charging all taxes and GST etc. Accomodation becomes a major cost for all students also
In my view, services provided by Hostel and Hotels stand on different footing. Hotel provides accommodation for short stay and is a commercial building, whereas the hostel provides for a long stay. Exemption provided at S.no. 12 of Notification no.12/2017 – CTR should be applicable in case of hostels also.
Exemption was available for hotels etc under Sr No 14 of Notification 12/2017 Central Tax (Rate). And the benefit of this exemption was available to hostels also as clarified in Circular No. 32/06/2018-GST. But now this exemption in the said entry has been removed, therefore this benefit is not available to hostels also.
GST for women’s hostel
Where young girls stay to get educated,their parents pay their fees for them .
There are few single parent too.
This year we had one inmate who discontinued her education as well as the hostel due to the family situation.
Government says women’s empowerment. Instead they are taxing the young girls . Kindly look into the matter.
The growth of the future women is in the hands of the government.
Absolutely right
Thank you sir