Treatment of Hostels under GST

Hostels are a popular choice for many travelers, particularly those on a budget. They offer affordable accommodation, often in great locations, and a friendly atmosphere. However, when it comes to the treatment of hostels under GST, things can get a little confusing.

Before we dive into the details, let's first understand what GST is. GST or Goods and Services Tax is a comprehensive tax that is levied on the supply of goods and services in India. It was introduced on 1st July 2017, replacing multiple indirect taxes that were previously in place.

Now, let's move on to how hostels are treated under GST. Hostels fall under the category of "Accommodation Services" and are subject to GST. The GST rate applicable to accommodation services is 12%. However, there are certain exemptions and conditions that apply.

Exemptions

Hostels that provide accommodation services with tariffs of up to Rs. 1,000 per day are exempt from GST. This means that if you are staying in a hostel that charges less than Rs. 1,000 per day, you will not have to pay any GST.

In addition to this, hostels that are run by charitable organizations and are registered under Section 12AA of the Income Tax Act are also exempt from GST.

Conditions

Hostels that charge tariffs above Rs. 1,000 per day are subject to GST at the rate of 12%. However, there are certain conditions that apply. Let's take a look at them:

1. Input Tax Credit : Hostels that charge tariffs above Rs. 1,000 per day are eligible to claim input tax credit. This means that they can claim a credit for the GST paid on the goods and services that they purchase for their business. However, in order to claim the input tax credit, the hostel must be registered under GST.

2. Invoice : Hostels that charge tariffs above Rs. 1,000 per day must issue an invoice for the services provided. The invoice must contain certain details such as the name and address of the hostel, the GSTIN of the hostel, the date of the invoice, and the amount of GST charged.

3. Records : Hostels that charge tariffs above Rs. 1,000 per day must maintain proper records of all their transactions. This includes records of all invoices issued and received, GST paid and collected, and any other relevant documents.

Conclusion

So, there you have it - the treatment of hostels under GST. While it may seem confusing at first, it's important to understand the exemptions and conditions that apply. If you are a hostel owner, make sure you are registered under GST and are following all the necessary guidelines. And if you are a traveler, make sure you understand the GST implications when choosing a hostel to stay in.