GST Exemption for Hostel Accommodation Under STC/AAR/11/2018
The Chhattisgarh Authority for Advance Ruling confirmed that hostel accommodation with a daily tariff below Rs. 1000 is exempt from GST.
- Ruling
- No. STC/AAR/11/2018, dated 02.03.2019
- Authority
- Authority for Advance Ruling
This page was written by Patron Accounting’s AI from the official release and reviewed before publishing. It explains the document in plain language. It is not the document itself. Where this page and the original differ, the original governs.
The short version
- Hostel services are classified as a composite supply.
- Accommodation is the principal supply for the trust.
- Services priced under Rs. 1000 per day are exempt from GST.
In short
The Ramnath Bhimsen Charitable Trust asked the Chhattisgarh Authority for Advance Ruling (AAR) if their hostel services were taxable under the Goods and Services Tax (GST). They provide furnished rooms, food, and security for a single monthly fee. The authority examined whether these bundled services qualified for a tax exemption.
What has changed
How it worked before
It was previously unclear if bundled hostel services provided by charitable trusts were considered taxable commercial lodging or exempt residential accommodation.
What has changed
The authority ruled that because the daily cost is below Rs. 1000, the service is exempt from GST. This means businesses providing similar low-cost hostel accommodation do not need to charge GST on their monthly fees.
Who this affects
Charitable trusts and private operators running hostels with low daily tariffs.
An example
A private hostel operator in Raipur charges students Rs. 900 per day for a room including meals. They wonder if they must register for GST. Based on this ruling, their service likely qualifies as an exempt supply because the daily rate is below the Rs. 1000 threshold.
What you should do
This ruling only applies to the specific trust that asked the question. If you run a similar hostel, you should consult with a tax professional to see if your specific pricing and service structure qualifies for this exemption, as your local tax officer is not legally bound by this decision.
If you do nothing
If you assume this ruling applies to you and stop collecting GST without professional confirmation, you risk a tax demand notice. If your local tax officer disagrees with your interpretation, you may be liable for unpaid taxes, interest, and penalties. Always seek a formal opinion for your specific business model.
The terms explained
- Composite supply
- A package of two or more goods or services provided together where one is the main service and the others are naturally bundled with it.
- Exempt supply
- A supply of goods or services that is not subject to GST, meaning no tax is collected from the customer.
- Principal supply
- The main or primary service provided in a bundle, which determines the tax treatment for the entire package.
The ruling in detail
Authority for Advance Ruling
Ramnath Bhimsen Charitable Trust
No. STC/AAR/11/2018, dated 02.03.2019 · Chhattisgarh
Questions before the authority
- Whether the activity of providing the hostel on rent to various boarder is exempted? If it is exempted in such case, under which exemption notification the same is exempted.
- Whether the activity of providing the hostel on rent to various boarder is taxable? If it is taxable, in such case, under which service access code the same is taxable?
Facts
The applicant is a charitable trust running girls' hostels providing basic facilities including furnished residence, security, food, and parking. They charge a single lump-sum fee of Rs. 6000 per month per boarder, which covers all these services. The trust maintains that these charges are solely for meeting maintenance and administrative expenses.
Ruling
| Question | What the authority ruled |
|---|---|
| Hostel accommodation services | Exempt Applicable where daily tariff is below Rs. 1000 |
The authority ruled that the activity of providing hostel accommodation is exempt from GST. It concluded that the services fall under the category of residential or lodging purposes with a declared tariff below Rs. 1000 per day. Consequently, the supply is treated as a nil-rated exempt supply.
Reasoning
The authority determined that the hostel services constitute a **composite supply** where the principal supply is accommodation. Relying on Circular No. 32/06/2018-GST, it clarified that hostel accommodation does not fall under charitable activities but qualifies for exemption under **Entry No. 14 of Notification No. 12/2017-Central Tax (Rate)**. Since the per-day charges are well below the Rs. 1000 threshold, the service is classified under **Heading 9963** and is eligible for a nil rate of tax. The authority noted that no additional charges are collected for allied services, reinforcing the classification as a single exempt supply.
Provisions relied on
- Section 2(30) of the CGST Act
- Section 2(74) of the CGST Act
- Section 2(90) of the CGST Act
- Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017
- Circular No. 32/06/2018-GST dated 12.02.2018
For the practitioner
This ruling provides significant relief to charitable trusts and hostel operators by confirming that **hostel accommodation is exempt** if the daily tariff is below Rs. 1000. It establishes that allied services like food and parking, when provided as a bundled service without extra charges, do not alter the exempt status. Practitioners should note this applies specifically to low-cost residential arrangements and does not necessarily extend to luxury or high-tariff commercial lodging.
Source
This is a summary prepared from the published order, which is a scanned document. It is a reading aid and not the authority: where the two differ, the order governs. Verify every provision against the original before relying on it.
Original order: https://www.gstcouncil.gov.in/sites/default/files/AAR/chhtgrh-11_2018-rbc_trust.pdf
Legibility of the scan, as read: high.
Prepared 21-10-2026.
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