Supreme Court Affirms GST Exemption For Residential Premises Leased As Hostels

The article covers a landmark ruling by the Supreme Court of India, which held that leasing of a residential property to an aggregator or operator — who in turn sub-leases it as hostel or PG accommodation to students or working professionals — remains eligible for GST exemption under Entry 13 of the relevant GST Notification. The Court clarified that the exemption is “activity-specific” and not dependent on the identity of the lessee; what matters is the nature of the premises (a residential dwelling) and its ultimate use (residence). The decision overruled earlier contrary rulings by the Authority for Advance Ruling (AAR) and its appellate body, which had denied exemption when the lessee was a company. According to the Court, since the property continues to serve residential use (despite sub-leasing), imposition of 18% GST would defeat the legislative intent behind exempting residential rentals. The article explains how this judgment brings clarity for landlords, real-estate lessors, hostel/PG operators and students — ensuring GST does not add to accommodation costs under such long-term residential schemes. The ruling is likely to have major implications for the student-housing and shared-living sector across India, reducing cost burden and compliance uncertainty.