Avalara > Blog > Goods and Services Tax > Leased residential complexes to be used as a paying guest facility will attract GST

Leased residential complexes to be used as a paying guest facility will attract GST

  • Jun 5, 2020 | Divita S Gupta

The Authority for Advance Ruling in Karnataka held that leading out a residential complex as a paying guest facility will attract GST. The applicant sought an advance ruling on two issues viz. whether the exemption of services by way of renting of residential dwelling for use as a residence can be availed and whether a lease service falls under the exemption and can be defined as ‘services by way of renting of residential dwelling for use as a residence.’ The bench observed that the property, consisting of ‘42 rooms along with 2,400 sq. ft of terrace area,’ cannot be termed as a residential dwelling. It also said that the applicant, along with other lessors, has collectively leased out their premises, and infers that the contract is for the entire property given as a single piece and that sharing of the rent is only an apportionment of the common income. Since the amount collected is in the course of or furtherance of business, the transaction between the lessor and Company would constitute a ‘supply’ of service in terms of law and hence will attract GST. 


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Avalara Author
Divita S Gupta
Avalara Author Divita S Gupta
Divita has served as a writer and editor for top financial services organizations in India. She has written on topics like mutual funds, insurance, taxes, SME financing for globally recognized banking and financial organizations including ICICI, Aditya Birla Group, News Corp. With a Masters in Business Administration from Symbiosis International University, she currently owns a small business in Mumbai.