GST on renting of residential dwellings along with amenities to students & working women

In re Deeksha Sanjay (GST AAR Karnataka)

The Authority for Advance Ruling (AAR) in Karnataka recently addressed the GST implications of renting residential dwellings to students and working women, along with various amenities and facilities. The case in question is titled In re Deeksha Sanjay, and it sought clarification on three key aspects:

a. Whether renting residential dwellings along with amenities is exempt under entry No.12 of Notification No.12/2017-Central Tax (Rate) dated 28.06.2017.

b. If not exempt, what is the applicable GST rate?

c. Can the applicant claim Input Tax Credit (ITC) on inputs used for providing taxable services?

Background

The applicant, engaged in renting residential properties, argued for GST exemption under entry No. 12 of Notification No.12/2017-Central Tax (Rate) dated 28.06.2017.. They provided residential accommodation to students and working women, offering amenities such as food, furniture, appliances, cleaning, security, pest control, etc., on a monthly rental basis.

Findings and Discussion

• Exemption under Entry No. 12: The AAR concluded that the services provided by the applicant did not qualify for exemption under Entry No. 12. The exemption is specific to services by way of renting residential dwellings for use as residence, and the nature of the applicant’s services did not align with this definition.
• Applicable GST Rate: The AAR determined that the applicant’s services fell under SAC 9963, attracting GST at a rate of 12%. The classification was based on the nature of the accommodation services provided, aligning with the scheme of classification outlined in the Explanatory Notes.
• Claiming Input Tax Credit: The AAR clarified that the applicant could claim ITC on inputs used for providing taxable services, subject to fulfilling the conditions stipulated under Sections 16 & 17 of the CGST Act 2017 and the corresponding rules.

Key Considerations