Women's Hostels Exempted from GST Levy, Rules Madras HC

By: WE Staff | Monday, 25 March 2024

The Madras High Court rejected the demand for GST levy on hostels for working females and young girls. The court ruled that GST applies solely to commercial rented structures, excluding residential premises. During the deliberation on the issue of GST on hostel accommodation, Justice Krishnan Ramaswamy argued that it is important to differentiate whether inhabitants of rooms in hostels primarily use their space as a living quarter or for carrying out business activities. Only if a house meant for habitation is leased for commercial purposes would it attract GST. Here, being used mainly for residential purposes, hostels should not pay GST.

The judgment addressed pleas from private managers of working female’s and girl’s hostels. They challenged an 18% GST imposed by TN's Advance Ruling Appellate Authority, effective August 31, 2023.

The court clarified that the provider of services is only an intermediary for the facilities of the hostel and only modified the GST. Therefore, there would be no GST on residential units in hostels as long as they are used for residential purposes alone. This ruling has important implications on GST collections in hospitality industry that are important to Indian economy.