GST on hostels and PGs: 90 days and Rs 20,000 — both conditions have to hold together
The hostel and PG exemption asks for two things — a continuous stay of 90 days and rent of no more than Rs 20,000 per person per month. Break either one and the whole supply is taxable. And what '90 days' means for a student is the part most often got wrong.
Prabhakar Kumar
Chartered Accountant (ICAI, Nov 2019)
📅 16 Aug 2026
⏱ 5 min read
904 words
GST on hostels and PGs was unsettled for years. Different AAR rulings, different views, and operators genuinely unsure whether to register.
Since 15 July 2024 there is a clear entry — and it carries two conditions.
A student coming for a full semester clears it without difficulty. The problem lies in arrangements where no 90-day commitment is written down — rolling monthly terms, "stay as long as you like".
Before this entry there were several AAR rulings taking differing views, and many operators have open assessments for that period.
Circular No. 228/22/2024-GST clarified the position for the earlier period.
# Mess, laundry and food — do not fold these into accommodation
This is a separate question, and this guide does not offer a blanket answer.
If you charge separately for food, mess or laundry, each has its own classification. Whether it forms a composite supply with accommodation, a mixed supply, or an entirely separate supply depends on your agreement and billing pattern.
Pull out your agreements — is a minimum 90-day commitment written in?
Compute per-person value, not per room — who is close to ₹20,000?
Check whether check-in and check-out records exist — that is the whole defence of the exemption
Charging separately for mess or food? Decide that treatment deliberately
Any open matter before 15 July 2024? Review it with Circular 228/22/2024
Also taking short-stay guests? Then Rule 42 and 43 reversal applies to you
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What are the conditions for the hostel and PG exemption?
There are two, and both must hold together. First, the value of accommodation must not exceed Rs 20,000 per person per month. Second, there must be a minimum continuous stay of 90 days. If either fails, the exemption is unavailable and the supply is taxable. This came in through Entry 12AA with effect from 15 July 2024.
Is the Rs 20,000 limit per room or per person?
Per person per month, and the difference is significant. If three students share a room and each pays Rs 8,000, the per-person value is Rs 8,000, which is within the limit. The room total of Rs 24,000 is irrelevant. People often look at it room-wise and reach the wrong conclusion.
How is the 90-day stay counted?
The stay must be continuous, which means both the agreement and the actual occupancy should run for 90 days or more. A student coming for a full semester clears it easily. Short-term or rolling monthly arrangements with no 90-day commitment raise a question. Documentation is everything here.
What if the stay turns out to be shorter than 90 days?
The exemption is not available, however low the rent. This is clear — short-term accommodation, even below Rs 1,000 per day, does not qualify unless the 90-day condition is met. A low rate does not create the exemption; satisfying both conditions does.
What about the period before 15 July 2024?
Circular No. 228/22/2024-GST clarified the position for that period. There had been a number of AAR rulings and considerable litigation on the subject, with differing views. If you have an open assessment or notice for that period, review your case against that circular — it is a one-time exercise.
If the supply is exempt, is registration still needed?
Where all your supplies are exempt, registration is generally not required. But if you have a mix — some stays under 90 days, or separate charges for mess or laundry — the full picture has to be examined. Exempt and taxable supplies can coexist in one building.
Are mess and food charges also exempt?
That is a separate question and should not be merged with accommodation. If food is charged separately it is judged on its own classification. A composite or mixed supply analysis applies, and it depends on each hostel's agreement and billing pattern. Treating it as exempt by default is risky.
How does this differ from GST on hotels?
Hotel accommodation runs on a different entry — from 22 September 2025, 5% without ITC up to Rs 7,500 per day and 18% above that. The hostel and PG exemption is separate and requires the 90-day and Rs 20,000 conditions. If one property does both kinds of business, both treatments apply separately.
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