Hostels are a popular accommodation option for travelers looking for budget-friendly and comfortable stays. These establishments are run by various individuals or organizations and provide basic amenities such as dormitories or private rooms, meals, and other services. However, when it comes to the treatment of hostels under GST, there is often confusion among owners and operators.
The Goods and Services Tax (GST) is a comprehensive tax levied on the supply of goods and services in India. It is a value-added tax that is charged on every stage of the supply chain, from the manufacturer to the consumer. Hostels are no exception to this rule and must comply with the GST regulations.
The treatment of hostels under GST depends on several factors such as the type of accommodation provided, the services offered, and the rental charges. In this article, we will take a closer look at the GST regulations for hostels and how they affect owners and operators.
A hostel is defined as an establishment that provides lodging facilities to travelers, backpackers, students, and other individuals at an affordable price. Hostels typically offer dormitory-style accommodation, which involves sharing rooms with other guests, as well as private rooms with en-suite bathrooms.
Hostels also offer various services such as meals, laundry facilities, Wi-Fi, and travel assistance. Some hostels may provide additional recreational facilities such as swimming pools, gyms, and entertainment rooms.
Under the GST regime, hostels are classified as ‘Accommodation Services.’ They are liable to pay GST on the rental charges, which are inclusive of any other services provided. The GST rate applicable to accommodation services is 12%.
However, there are some exceptions to this rule. Hostels that provide accommodation to students or educational institutions are exempt from GST. Similarly, hostels that provide accommodation to patients and their attendants in hospitals are also exempt from GST.
Input tax credit (ITC) is a mechanism that allows businesses to claim credit for the tax paid on their purchases. ITC can be claimed on the GST paid on goods and services used for business purposes.
Hostel owners and operators can claim ITC for the GST paid on goods and services used for their operations. This includes furniture, fixtures, electrical appliances, food supplies, and other services such as laundry, Wi-Fi, and transportation.
Hostels are an important part of the tourism industry, providing affordable accommodation options to travelers and students. The GST regulations for hostels can be complex, but it is essential for owners and operators to understand them to comply with the law.
Hostels must pay GST on their rental charges at a rate of 12%. They can also claim input tax credit for the GST paid on their purchases. However, there are exceptions to the GST regulations for hostels, such as those providing accommodation to students and patients in hospitals.
If you are a hostel owner or operator, it is advisable to consult with a tax professional to ensure that you are complying with the GST regulations and taking advantage of the input tax credit.
Coconut Abaca - GST rates and HSN code 5305
SIGN PLATES - GST RATES & HSN CODE 8310
GST Rate HSN Code for Elements or Isotopes - Chapter29