GST is applicable on Subletting of Accommodation – Advance Ruling Authority (AAR), Karnataka.

• As we all know Renting of residential dwelling for residential purpose is exempt under GST.

• But in recent case, ruling given by the Advance Ruling Authority, Karnataka Subletting of the accommodation by the tenant is now taxable under GST.

• In the given case, 42 single rooms attached with the bathroom have been sublet by the tenant to the students for the period ranging between 3 months to 11 months.

• As per the authority, Single Rooms attached with bathroom which is sublet to the student can not be qualified as Residential Dwellings.

• Further, Tenant is subletting rooms not in Individual capacity but as a group of lessors and there is agreement of providing service subletting of property for consideration.

• Hence, as per the decision given by the AAR, Subtenant should issue invoice for the service of subletting and charge the GST on the value of rent.

• Based on ruling, Tax Authority can demand the 18% GST applicable on the renting residential hostel-style accommodations to schools, colleges, educational institutions, offices, corporates, or any other establishment.