Construction of buildings, such as hostels, principal's bungalow and staff quarters, in educational institutions is taxable at lower rate of goods and services tax (GST), if the structures are not used for commercial activities than those for normal business purposes, ruled Gujarat Authority for Advance Rulings (AAR).

The court ruled that such buildings would draw 12 per cent GST, and not 18 per cent levied for other construction activities. It should be noted that education draws zero GST, while construction work and the iputs used therein attract tax.


The applicant, Tirupati Construction, approached AAR to find out about the applicability og GST on these activities. The company was awarded a works contract for constructing a hostel and staff quarters at a village in Surat by the Road and Building Department of the Gujarat government.

While the company argued for 12 per cent GST rate, the revenue department opposed it on the ground that the co