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Karnataka AAR ruling: Subletting, leasing under GST ambit

Karnataka AAR ruling: Subletting, leasing under GST ambit

The Authority on Advance Rulings (AAR), Karnataka has ruled that GST is applicable on residential accommodation sublet by a tenant, a ruling that experts said could open a Pandora’s box of litigations.

In a case involving about 42 single rooms having been sublet by a tenant to students for periods ranging between three months to 11 months, AAR noted that the property given out for sub-renting matched that of a hotel – rooms with attached bathrooms – “which can by no imagination be termed as residential dwelling”, or a house.

While renting of accommodation is exempted from the goods and services tax (GST), the authority has ruled, “The exemption prescribed cannot be sought and the lessors have to charge GST while issuing invoice for the lease services.

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