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Short answer: most PGs in India do not charge GST. Since 15 July 2024, accommodation costing ₹20,000 or less per person per month is exempt, as long as the stay is at least 90 days continuously. If a bed costs more than that, or the stay is shorter, the PG’s accommodation is taxable at 5% (without input tax credit) under the rates in force since September 2025.
This guide explains the rule, the edge cases owners actually run into — food, short stays, extras — and when a PG has to register for GST. It is general information, not tax advice: confirm your position with a chartered accountant.
The ₹20,000 / 90-day exemption
The 53rd GST Council (22 June 2024) recommended relief for hostel and PG accommodation. CBIC brought it in through Notification 04/2024-Central Tax (Rate), dated 12 July 2024, effective 15 July 2024. It added a new entry, Sl. No. 12A, to the main services exemption notification (12/2017-CT(Rate)):
“Supply of accommodation services having value of supply less than or equal to twenty thousand rupees per person per month provided that the accommodation service is supplied for a minimum continuous period of ninety days.”
Both conditions must be met:
| Condition | What it means in practice |
|---|---|
| Value ≤ ₹20,000 per person per month | Measured per resident, not per room. A ₹30,000 double room shared by two people is ₹15,000 per person. |
| Continuous stay of 90 days or more | Long-stay residents qualify. Daily guests, weekly stays and short internships of under 90 days do not. |
The exemption is not limited to students — it covers working professionals too, and any accommodation provider, not just hostels attached to colleges.
The same notification also took accommodation services (heading 9963) out of the older “renting of residential dwelling” exemption. So for a PG, entry 12A is now the rule that matters.
What about the years before July 2024?
Before the exemption, PG rent was a grey area. In 2023 the Karnataka Authority for Advance Ruling held that a PG/hostel is not a “residential dwelling” and taxed it at 12% (an advance ruling binds only the applicant). Courts went the other way: the Madras High Court in 2024 treated long-stay hostels for students and working women as residential dwellings, and in December 2025 the Supreme Court upheld a Karnataka High Court ruling that leasing a residential building to run a long-term hostel was exempt.
CBIC’s Circular 228/22/2024-GST (15 July 2024) regularised the period from 1 July 2017 to 14 July 2024 on an “as is where is” basis for supplies meeting the same two conditions. In plain terms, past periods are not reopened, but tax already paid is not refunded. If you have an old notice, take it to your CA with that circular.
If rent is above ₹20,000 or the stay is shorter than 90 days
Then the exemption does not apply and the accommodation is taxable. After the 56th GST Council (3 September 2025), from 22 September 2025 accommodation with a value of ₹7,500 or less per unit per day is taxed at 5% without input tax credit; above ₹7,500 a day it is 18%.
A PG bed works out far below ₹7,500 a day, so a taxable PG stay falls in the 5% bracket. Many older articles still say 12% or 18% — those rates are out of date for ordinary PG tariffs.
| Example | Exempt? | GST |
|---|---|---|
| ₹9,000/month bed, resident stays 11 months | Yes — ≤ ₹20,000 and 90+ days | Nil |
| ₹24,000/month private room, 6-month stay | No — above ₹20,000 | 5% of ₹24,000 = ₹1,200/month |
| ₹800/day guest for 10 days | No — under 90 days | 5% of ₹8,000 = ₹400 |
| ₹16,000/month bed, resident leaves after 60 days | No — under 90 days (see note) | 5% |
Note on early exits: the condition is about the period the service is supplied for. If someone agrees to a long stay and leaves early, how to treat it is not spelled out — keep the agreement and records, and ask your CA.
Food, electricity and extras
- Meals included in the rent. Rulings differ. Some authorities treat accommodation plus in-house food as a composite supply (taxed like the main supply, accommodation); one Rajasthan appellate ruling called it a mixed supply because residents could get food elsewhere. If food is bundled into one monthly price, the safer reading is that the whole package counts towards the ₹20,000 limit.
- Optional extras charged separately — parking, laundry, AC usage, TV — can be treated as separate supplies and taxed on their own, as the Karnataka AAR did.
- Electricity passed on at cost is usually treated as a reimbursement, but if you mark it up or bundle it, check with your CA.
Does a PG need GST registration?
- If every bed qualifies for the exemption: no. Section 23(1)(a) of the CGST Act says a person supplying only goods or services that are wholly exempt does not need to register.
- If you also make taxable supplies — short stays, rooms above ₹20,000, separately charged extras — the normal threshold applies: registration once your aggregate turnover crosses ₹20 lakh a year (₹10 lakh in some special-category states). Exempt rent counts towards that turnover.
- Voluntary registration is possible, but for a PG at the 5% no-credit rate it rarely saves money. Discuss it with your CA first.
If you lease a building to run your PG
Since 18 July 2022, when a GST-registered person rents a residential dwelling, the tenant pays 18% GST under reverse charge. So a registered PG company that leases a residential building from a landlord may owe reverse-charge GST on that lease rent. An unregistered PG operator does not. This is one more reason small operators whose beds are all exempt often stay unregistered.
Quick checklist for PG owners
- List every bed with its monthly price per person.
- Confirm each long-stay resident has an agreement for 90 days or more — an 11-month PG agreement is the usual proof.
- Separate daily or short-stay guests in your records; those stays are taxable.
- Write down what the rent includes (food, electricity, Wi-Fi) so the per-person value is clear.
- If any supply is taxable, track your turnover against the ₹20 lakh threshold.
- Keep receipts for every payment — our free rent receipt generator or an app that issues them automatically.
Running the numbers for a new PG? Our guide to starting a PG covers licences and registrations, and the PG Rent Index 2026 shows what tenants actually pay in each city.
Frequently asked questions
Is GST applicable on PG rent?
Not if the rent is ₹20,000 or less per person per month and the resident stays at least 90 days continuously — that is exempt since 15 July 2024. Otherwise the accommodation is taxable at 5% without input tax credit.
What is the GST rate on hostel accommodation in 2026?
Exempt for stays of 90+ days at up to ₹20,000 per person per month. Taxable stays priced at ₹7,500 a day or less — which covers virtually all PGs and hostels — are at 5% without input tax credit since 22 September 2025.
Do PG owners need GST registration?
Not if all their supplies are exempt. If they also make taxable supplies, registration is required once aggregate turnover crosses ₹20 lakh (₹10 lakh in some special-category states).
Is food included in the ₹20,000 limit?
If food is bundled into one monthly price, the safer view is that the whole package is the value of supply. Rulings differ, so confirm with a CA.
What is the SAC code for PG accommodation?
PG and hostel accommodation generally falls under heading 9963 (accommodation services); SAC 996322 is commonly used for hostels and paying guest accommodation.
Sources
- Notification 04/2024-Central Tax (Rate), 12 July 2024 — reproduced by ICAI Navi Mumbai; summary on Taxmann.
- Circular 228/22/2024-GST — reproduced by the Goa Commercial Taxes Department.
- Hotel/accommodation rate after the 56th GST Council — TaxGuru.
- Karnataka AAR on PG/hostel at 12% (2023) — LiveLaw; Madras HC (2024) — Bar & Bench; Supreme Court, 2025 INSC 1380 — Verdictum.
- Registration exemption for wholly exempt suppliers, Section 23(1)(a) — TaxGuru.
Last reviewed: October 2026. This article is general information and not tax advice.
We build My PG Manager, the app PG and hostel owners use for rooms, tenants, rent collection and WhatsApp reminders. Our guides come from running it with owners across India.
