The Karnataka State Advance Authority Ruling (AAR) recently stated that a tenant would be subjected to the Goods and Services Tax (GST) for the sub-letting and sub-leasing facilities.
The ruling was delivered while considering an application by a tenant, a GST registered proprietary concern wherein the applicant said that for periods ranging from three months to 11 months, he sub-let to 42 students.
When disposing of the application, the AAR acknowledged that the sub-rented property matched that of a hotel room with attached bathrooms and could not be considered a residential home or a building.
After checking the contract between the applicant (tenant) and the business (the owner of the building), the Authority noted that what is given is an immovable property consisting of only rooms with attached toilets. It also set out in the layout of the leased premises annexed to the Lease Agreement and does not fit into the sense of a dwelling that means home.
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They are like hotel rooms, and there are 42 rooms in the entire leased property, which can not be considered a residential dwelling by any means. Also, if the same goes for residential purposes, the facilities offered are not intended for use by the lessee as a home.
Different entries cover services by a hotel, inn, guest house, club site or campsite, whatever name it is called, or other commercial premises for residential or accommodation purposes in the schedule of this notification or under various announcements. All those notifications indicate that rooms rented for residential purposes do not equate to a residential dwelling, and thus the entry is not valid.
For any clarifications/feedback on the topic, please contact the writer at dvsr.anjaneyulu@cleartax.in
DVSR Anjaneyulu known as AJ, is a Chartered Accountant by profession. Loves to listening to music & spending time with family and friends.
