GST on Hostel Accommodation: Tamil Nadu Advance Ruling TN/36/AAR/2023
The Tamil Nadu Authority for Advance Ruling decided that hostel accommodation services are taxable at 18% and do not qualify for residential exemptions.
- Ruling
- Advance Ruling No.36/AAR /2023 Dated:31.08.2023
- 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 not considered renting of a residential dwelling.
- Food and lodging provided together are treated as a composite supply.
- Hostel accommodation is taxable at 18% GST.
- The residential dwelling tax exemption does not apply to hostels.
In short
Snegithi Ladies and Catering asked if their hostel services were exempt from Goods and Services Tax (GST) as residential dwellings. The authority decided that because hostels provide commercial services like security and housekeeping, they are not private residences and must pay tax.
What has changed
How it worked before
Many hostel operators assumed that providing long-term lodging to students and working women qualified as an exempt residential rental service.
What has changed
The authority ruled that hostels are commercial businesses, not residential dwellings. This means operators must collect 18% GST on their services, and they cannot claim the exemption meant for private home rentals.
Who this affects
Owners of hostels, paying guest accommodations, and similar residential facilities for students or working professionals.
An example
A hostel owner in Chennai provides rooms and meals to students for a monthly fee. They previously did not charge GST, believing it was a residential rental. Based on this ruling, they should consult a tax advisor to determine if they need to register for GST and start charging 18% on their services.
What you should do
If you operate a hostel, you should review your tax liability with a professional. Remember that an Advance Ruling only binds the business that asked for it and its specific tax officer; it is not a law that automatically applies to your business.
If you do nothing
If you assume this ruling does not apply to you and stop collecting GST, you risk being hit with tax demands, interest, and penalties later. A tax officer may disagree with your interpretation and hold you liable for the unpaid tax for all past periods.
The terms explained
- Composite supply
- A bundle of two or more goods or services provided together that are naturally sold as a package, where one is the main service.
- Principal supply
- The main or primary service in a bundle of services that determines the tax rate for the entire package.
- Advance ruling
- A formal decision from tax authorities on how GST laws apply to a specific business situation.
The ruling in detail
Authority for Advance Ruling
M/s. Snegithi Ladies Hostel and Catering
Advance Ruling No.36/AAR /2023 Dated:31.08.2023 · Tamil Nadu
Questions before the authority
- Whether the hostel and residential accommodation extended by the Applicant hostel would be eligible for exemption under Entry 12 of Exemption Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 and under the identical Notification under the TNGST Act, 2017 and under Entry 13 of Exemption Notification No.9/2017 - Integrated Tax-Rate dated 28.06.2017 as amended?
- Whether the Applicant hostel being eligible for exemption under Sl. No. 12 of Notification-12/2017 (CT-Rate) dated 28.06.2017 as amended would at all be required to take registration under the GST Enactments by virtue of the Exemption Notifications as afore mentioned and also under the provisions of Section 23 of the CGST/TNGST Act, 2017?
- Whether any specific tariff entry is applicable to hostels under the Tariff Notification, in the event of requirement of registration?
- Whether, in the event of the hostel accommodation being an exempt activity, whether the incidental activity of supply of in-house food to the inmates of the hostel would also be exempt being in the nature of a composite exempt supply?
- Whether the judgement of the Division Bench of the Hon'ble Karnataka High Court in the case of Taghar Vasudeva Ambrish -vs- Appellate Authority for Advanced Ruling, Karnataka reported in Manu/KA/0327/2022 is applicable to the facts of the applicant?
Facts
The applicant operates a ladies' residential hostel for students and working women, providing boarding and lodging facilities for a consolidated monthly charge. They provide single, double, or dormitory-style accommodation along with in-house food services prepared by their own staff. The applicant claims these services qualify as renting of residential dwelling for use as residence and are thus exempt from GST.
Ruling
| Question | What the authority ruled |
|---|---|
| Eligibility for exemption under Notification 12/2017-CT(R) | Not eligible for exemption The services do not qualify as renting of residential dwelling for use as residence |
| Taxability of hostel accommodation services | Taxable @ 9% CGST + 9% SGST Under Sl. No. 7(vi) of Notification No. 11/2017, Central Tax (Rate), as amended |
| Taxability of in-house food as composite supply | Taxable @ 18% The hostel accommodation is the principal supply |
| Applicability of Karnataka HC judgment | No ruling issued Question does not fall under the scope of Section 97(2) of the GST Act |
The Authority ruled that the hostel accommodation services provided by the applicant do not qualify as renting of residential dwelling for use as residence and are therefore not eligible for the claimed exemption. Consequently, the services are taxable as a composite supply, with the hostel accommodation being the principal supply. The Authority further held that the question regarding the applicability of the Karnataka High Court judgment was not within the scope of Section 97(2) of the GST Act.
Reasoning
The Authority reasoned that hostel accommodation is **commercial in nature** and distinct from the renting of a residential dwelling for use as a residence. It observed that the applicant provides a bundle of services, including housekeeping and security, which are characteristic of a business establishment rather than a private residence. The Authority relied on the **strict interpretation of exemption notifications** and concluded that the applicant's services fall under the category of accommodation services taxable under the GST Act. It further determined that the provision of food and lodging constitutes a **composite supply** with accommodation as the principal supply.
Provisions relied on
- Section 98(4) of CGST Act, 2017
- Section 97(2) of CGST Act, 2017
- Section 2(30) of CGST Act, 2017
- Section 8 of CGST Act, 2017
- Entry 12 of Exemption Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017
- Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017
- Notification No. 20/2019-Central Tax (Rate) dated 30.09.2019
For the practitioner
This ruling confirms that hostel accommodation services are **taxable at 18%** and do not qualify for the residential dwelling exemption. It clarifies that the provision of food and lodging in a hostel is treated as a **composite supply** with accommodation as the principal supply. Practitioners should note that the Authority explicitly rejected the applicability of the Karnataka High Court's decision in the Taghar Vasudeva Ambrish case to the facts of this applicant.
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/36_snegithi_ladies_hostel_and_catering.pdf
Legibility of the scan, as read: high.
Prepared 16-10-2026.
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