Paying Guest Accomodation, Service Tax

[Mohit Gupta]

Two Buildings are taken on rent by Mr. A at say INR 60,000 per month, per building on a 11 month residential accommodation lease. The same building is then furnished and converted to a fully furnished accommodation with about 20 beds per building and given on rent to individual students and working women at a monthly rent averaging to about 8000pm. Their are individual meters installed for charging individuals residents for Ac and geyser electricity consumption.

As part of bundled services - meals are provided to all residents.

Please suggest if the service tax is applicable as the accommodation has been given to individuals for a long term stay averaging more than an year per individual.

As per the clauses read by me on Google: even though the total receipts are more than 11 lac per annum, service tax should not be applicable as

1. The sub tenancy of individuals should fall under residential dwelling - not meant for temporary stay but as home to individuals.

2. the rent collected by us per bed is far less than ₹ 1000 per day.

3. The period of stay of individuals is more than 3 months.

Please suggest if service tax is applicable.

Also please suggest on the impact of GST that becomes applicable effective July 2017.

Posts / Replies

[KASTURI SETHI]

Dear Querist, When you talk of bundled services, you avail abatement of 30 %. You cannot avail benefits of both worlds. I mean to say abatement and exemption on account of rent per person being less than ₹ 1000/- per day. Take one stand. Regarding GST,. nothing is confirmed till enactment.

[MARIAPPAN GOVINDARAJAN]

Yes, what Shri Kasthuri says is correct.