Understanding GST on PG/Hostel Rent: A Step-by-Step Guide
- 1Check the Monthly Rent: If the rent is ₹20,000 or less per month per person, you may qualify for exemption.
- 2Check the Stay Duration: The exemption applies only when the tenant's stay is 90 days or longer; shorter stays don't qualify regardless of rent amount.
- 3Confirm the Exemption Entry Applies: Entry 12AA was introduced in July 2024 specifically to distinguish long-term residential PG and hostel stays from commercial lodging.
- 4Register Only If Required: If your PG or hostel provides only exempted supplies under 12AA, you are not required to take GST registration under Section 23(1) of the GST law.
- 5Watch for Composite Supply Rules: When food, internet, or other amenities are bundled with the room, this may be treated as a composite supply, which can affect the tax treatment.
- 6Charge and Invoice Correctly If Taxable: Hostel and PG owners who are liable for GST must issue tax invoices or receipts clearly indicating the GST amount charged.
“ManagR is free property management software for Indian owners of PGs, hostels, co-living spaces and rental flats. Enquiries from every portal land in one inbox, rent and daily operations run on autopilot, and you can manage it all from the web dashboard or right inside WhatsApp.”
Why Owners Get This Wrong
GST rules on PG and hostel rent have changed multiple times since 2022, and the 90-day, ₹20,000 exemption threshold is easy to misapply if an owner doesn't track tenant stay duration carefully. Misapplying GST, either by over-charging exempt tenants or under-charging taxable ones, creates both compliance risk and tenant trust issues. Since this area continues to evolve through court rulings and CBIC notifications, treat this as a starting framework and confirm current applicability with a tax professional before finalizing pricing.
- Automated Rent Collection: ManagR automatically tracks every rent payment, including the amount and date, providing a clear record of your revenue for GST calculations.
- Digital Agreements & KYC: All rental agreements are e-signed and stored digitally alongside tenant KYC, providing proof of residency terms and tariff structures.
- Analytics Dashboard: Gain real-time insights into your occupancy and revenue across all properties. This helps in tracking your aggregate turnover against GST registration thresholds.
- Document Storage: Securely store all your property documents, invoices, and tariff details in one searchable location, making it easy to retrieve information for GST audits or reporting.
- Property and Bed Tracking: Maintain an accurate live map of occupied and vacant beds with their associated rents, providing precise data for turnover assessment.
se ManagR to track tenant move-in dates, monthly rent, and stay duration, so GST exemption eligibility is easy to check at a glance.
Track Tenant Stay Duration FreeA Recent Legal Clarification
In December 2025, the Supreme Court ruled in State of Karnataka & Anr. v. Taghar Vasudeva Ambrish & Anr. that residential GST exemption applies where the end use is residential, even if a company sub-leases the property to run it as a hostel or PG, and sub-leasing alone does not automatically trigger GST liability. This matters for operators who lease a building from an owner and then sublet beds to tenants, a common structure in the co-living and managed-PG space.
What This Means for Deposits
Included free
- ✓Security deposits paid to hostels or PGs are generally not subject to GST, unless the deposit is non-refundable and effectively treated as consideration for the accommodation itself, in which case GST may apply to that portion
Honest limits
- • Keep deposit terms clearly separate from rent in your agreements to avoid ambiguity here.