GST on PG rent in India: the rules for paying guest and hostel owners (2026)
The short answer
Most ordinary PGs owe no GST at all. Two separate questions decide it, and they are often confused:
- Do you have to register? Only if your aggregate turnover across everything under the same PAN crosses ₹20 lakh in a financial year (₹10 lakh in some special category states).
- Is the PG rent itself exempt? Yes, where a bed is ₹20,000 or less per person per month and the resident stays a minimum continuous 90 days. Both must hold.
- If a bed fails either test, its rent is taxable at 5%, with no input tax credit — the rate since 22 September 2025. Older articles still say 12%.
The ₹20,000 test is per bed, not per room, and the 90 days is about the actual stay, not what the agreement says. Those two details catch out most of the owners who get this wrong. Check your own PG in about 30 seconds — no sign-up, nothing stored.
Who this is for: owners of paying guest accommodation and long-stay hostels for students and working professionals — beds let by the month to residents who live there. It does not cover rooms let by the night, which are taxed on a nightly tariff under different rules.
Almost every PG owner asks this in the wrong order. They start with “what is the GST rate on PG rent”, when the rate is the last thing that matters and usually never applies to them at all.
There are three tests, and they run in sequence. Fail the first and you stop — no registration, no GST, nothing to file. Pass it, and the next two decide whether the rent you collect is exempt anyway.
If you also let a flat or a shop and want the wider picture — the 18% commercial rate, the residential exemption and its reverse-charge trap — read GST on rental income in India alongside this.
The three tests
| # | Test | If you fail it |
|---|---|---|
| 1 | Is your aggregate turnover above ₹20 lakh in the financial year? (₹10 lakh in some special category states) | Below the threshold: no registration required. You can stop here. |
| 2 | Is every bed ₹20,000 or less per person per month? | A bed above the limit is outside the exemption and taxable at 5%, without input tax credit. |
| 3 | Does the resident stay a minimum continuous 90 days? | A shorter stay is outside the exemption and taxable at 5%, without input tax credit. |
Most PGs in Bengaluru, Pune and Hyderabad clear test 1 and then pass tests 2 and 3 comfortably — long-stay residents at eight to fifteen thousand a bed. Those businesses register for GST and their PG rent is exempt. That combination surprises people, so it is worth saying plainly: registered and exempt is normal, and it is not a contradiction.
Test 1: the 20 lakh threshold is PAN-wide
This is the single most expensive misunderstanding on this page.
Aggregate turnover is computed across your PAN, not across your PG. It adds up taxable supplies, exempt supplies, exports and inter-state supplies made under the same permanent account number. So if you run a PG that collects ₹14 lakh, let a commercial shop for ₹4 lakh and do ₹3 lakh of consulting on the side, you are at ₹21 lakh and over the line — even though no single activity crosses it.
Two consequences owners miss. First, exempt PG rent still counts towards the threshold; being exempt does not remove the income from the calculation. Second, the threshold is per financial year, so a PG that fills up mid-year can cross it in month eight with no warning if nobody is tracking the running total.
Test 2: 20,000 per bed, not per room
The exemption is written as value of supply less than or equal to ₹20,000 per person per month. Per person. This matters most for a PG with mixed sharing:
| Room | Total monthly charge | Per bed | Within limit? |
|---|---|---|---|
| Triple sharing | ₹33,000 | ₹11,000 | Yes |
| Double sharing | ₹30,000 | ₹15,000 | Yes |
| Single, premium floor | ₹22,000 | ₹22,000 | No |
The test applies bed by bed, not to your average. A PG with forty beds at ₹12,000 and two premium singles at ₹22,000 does not get to average its way to safety: the two singles sit outside the exemption while the other forty stay inside it. And if meals or laundry are bundled into the monthly charge, count them — they can push a bed over the line.
Test 3: 90 continuous days is about the stay
The condition is a minimum continuous period of 90 days. The safest reading is that this describes what actually happened, not what the agreement said would happen.
A resident who signs an eleven-month agreement and leaves in week six has lived there roughly forty days. Treating that as exempt because the paper said eleven months is the position most exposed to challenge. Short-stay beds — the ones you keep free for a fortnight here and a month there — are the ones to look at hardest, because they are exactly where the 90-day condition fails.
What changed for PGs, and when
The confusion in most articles on this subject comes from mixing up four different periods. In order:
| Period | Position for a PG |
|---|---|
| Up to 17 July 2022 | Rooms priced up to ₹1,000 a day were exempt. A PG bed at ₹12,000 a month is about ₹400 a day, so nearly every PG was covered without anyone thinking about it. |
| 18 July 2022 – 14 July 2024 | That exemption was withdrawn, and PG rent became taxable at 12% however cheap the bed — the period that caused most of the panic and most of the advance-ruling litigation. |
| From 15 July 2024 | A new and different exemption: ₹20,000 per person per month or less, minimum 90 continuous days. Notification 04/2024 dated 12 July 2024 inserted entry 12AA into Notification 12/2017-Central Tax (Rate). |
| From 22 September 2025 | The exemption is unchanged, but the rate on a bed that falls outside it dropped from 12% to 5% without input tax credit. Notification 15/2025-Central Tax (Rate) applies 5% to accommodation up to ₹7,500 per unit per day, which every PG bed is well below. |
If you read an article written before September 2025 and concluded a taxable PG bed costs 12%, that article was right at the time and is now out of date. Check the date on anything you read about this, including this page.
The years before July 2024
The obvious worry, once you understand the middle period, is whether the department can come after two years of unpaid GST on PG rent from 2022 to 2024.
Circular 228/22/2024-GST addressed this. It regularised the period from 1 July 2017 to 14 July 2024 on an as is, where is basis where the bed was ₹20,000 or less per person per month and was supplied for a minimum continuous period of 90 days — the same two conditions as the current exemption.
Two limits worth being clear about. It closes the past for beds that would have met the new conditions; it does not help a bed that was ₹25,000 a month or a stay that lasted three weeks. And as is, where is does not mean refunds: if you registered and paid GST during that window, this does not hand the money back.
If a bed is taxable: 5%, with no input tax credit
Where a bed fails test 2 or test 3 and you are over the registration threshold, you charge GST on that bed’s rent at 5%. Practically this means charging GST on those specific supplies and filing returns.
The part owners overlook is no input tax credit. At 5% you cannot set the GST you pay on furniture, renovation or outsourced services against what you charge, which is the trade the lower rate came with. For a PG with a handful of premium or short-stay beds, whether to restructure that inventory is a real conversation with your accountant, not a blog decision.
The traps
- Using the old 12% rate. It was replaced by 5% on 22 September 2025. Plenty of pages online have not caught up.
- Averaging the bed rate. The test is per bed. Two premium rooms can be taxable while the rest of the PG is exempt.
- Forgetting exempt rent counts. Exempt PG rent still goes into aggregate turnover for the registration threshold.
- Only counting the PG. Turnover is PAN-wide. Your other income counts.
- Relying on the agreement for the 90 days. What matters is the stay that actually occurred.
- Food and services. Where meals or laundry form a real part of the monthly charge, whether that is one composite supply or several is unsettled — and they count towards the ₹20,000 limit. Get advice on this one.
- Crossing the threshold mid-year. Nobody sends you a warning at ₹20 lakh. If you are not tracking the running total, you find out late.
Honest caveat: this is contested ground
Between 2022 and 2024 several Authority for Advance Ruling decisions reached opposite conclusions on whether PG and hostel accommodation is a residential dwelling — which would make it exempt on a completely different footing — with High Courts taking their own view. The July 2024 exemption settles the common case cleanly, which is why this guide leads with the three tests. It does not resolve every argument, particularly around bundled food and around PGs that mix long-stay and short-stay beds.
Anyone telling you this area is simple is either selling something or has not read the rulings.
Work out where you stand
If you run the PG day to day, the harder problem is usually knowing your running turnover before it crosses a threshold rather than the rule itself. Nestwise tracks rent, beds and charges per property, so the number is there when you need it — and it works from Telegram, which is where most owners already are.
Check your PG’s GST position
Our free checker runs all three tests on your actual numbers — turnover, bed rates and typical stay length — and tells you which of your beds sit inside the exemption and which do not. No sign-up, nothing stored.
Open the free PG GST checkerMore from Nestwise: all guides · GST on rental income · rental income tax calculator
Frequently asked questions
Is GST applicable on PG rent?
Usually not. PG rent is exempt from GST where the bed is 20,000 rupees or less per person per month and the resident stays for a continuous 90 days or more. And even where some beds fall outside that, you only have to register and charge GST once your aggregate turnover under the same PAN crosses 20 lakh rupees in the financial year (10 lakh in some special category states). Most ordinary PGs owe nothing.
Do I need GST registration for my PG?
Only if your aggregate turnover across everything you do under the same PAN crosses 20 lakh rupees in a financial year (10 lakh in some special category states). Below that threshold you do not register, whatever your rents look like. Above it you must register, and then a separate question arises — whether your PG rent is exempt from GST even though you are registered.
Is GST charged on PG rental income?
For the owner, the GST question is about the rent you collect from residents, not about income tax on it. Rent from a bed that meets both conditions — 20,000 rupees or less per person per month and a 90-day continuous stay — is exempt. Rent from a bed that fails either is taxable, but you only charge it once you are over the registration threshold. Income tax on the same money is a separate matter entirely.
What GST rate applies to a PG bed that is not exempt?
5 per cent, without input tax credit, since 22 September 2025. Notification 15/2025-Central Tax (Rate) cut the rate on accommodation priced up to 7,500 rupees per unit per day from 12 per cent to 5 per cent, and a PG bed works out to far less than that per day. Articles written before September 2025 still quote 12 per cent; that rate no longer applies. Because no input tax credit is available at 5 per cent, confirm the full effect on your costs with a chartered accountant.
Is the 20,000 rupee limit per room or per person?
Per person, per month. A triple-sharing room let at 30,000 rupees total is 10,000 per person, which is within the limit. A single room at 22,000 rupees is above it. This is why the test has to be applied bed by bed rather than to the room rate or to your average.
What does the 90-day condition actually mean?
The resident must stay for a minimum continuous period of 90 days. It is about the stay, not about what the agreement claims. A resident on an eleven-month agreement who leaves in the sixth week has not had 90 continuous days, and treating that stay as exempt on the strength of the paper alone is the position most likely to be challenged.
What about GST on my PG for years before July 2024?
Circular 228/22/2024-GST regularised the period from 1 July 2017 to 14 July 2024 on an as is, where is basis where the bed was 20,000 rupees or less per person per month and was supplied for a minimum continuous period of 90 days. In plain terms, past periods meeting the same two conditions were not reopened. It does not create a refund entitlement if you already paid.
Is GST charged on PG food, laundry and other services?
It can be, and this is genuinely unsettled. Where meals, laundry or cleaning are bundled into one inclusive monthly charge, the question is whether the whole thing is a single composite supply of PG accommodation or several distinct supplies taxed separately — and bundled services also count towards whether a bed crosses the 20,000 rupee limit. Departmental views and advance rulings have gone both ways. If a meaningful part of your monthly charge is food or services, take this specific point to a chartered accountant.
Does rental income from a flat count towards the 20 lakh PG threshold?
Aggregate turnover is computed PAN-wide, so taxable and exempt supplies made under the same PAN are added together. That means a PG business, commercial rent, freelance or consulting income and other supplies under your PAN are considered together for the registration threshold, even though each may be treated differently for tax once you are registered. Owners who look only at PG collections routinely underestimate where they stand.