What are short Term Rentals in the Country?
In India, short-term rentals are commonly referred to as “homestays.” Locally, terms such as “chutti ghar” (holiday home) and “kiraye ka makan” (rented house) are used to describe these properties. Major players in the Indian market include platforms like Airbnb, StayVista, and SaffronStays, Real Estate Dekho.
Homestays in India typically include properties rented out for a period ranging from a single night to a few months, often accommodating tourists and business travelers seeking a home-like environment. These rentals can be entire furnished homes, apartments, or even individual rooms within a home, providing flexibility and affordability compared to traditional hotel stays popular in major cities, tourist hotspots, and even rural areas, offering a unique blend of local culture and hospitality.
Is Subletting Legal?
The legality of subletting in India varies based on state laws and individual rental agreements. Subletting your rental property without explicit permission from your landlord can lead to significant legal and financial consequences. Your lease agreement should clearly outline whether subletting is allowed. If it’s silent on the issue, always seek written consent from your landlord before proceeding.
Remember, unauthorized subletting is a breach of contract that could result in eviction or other legal actions. To avoid potential disputes and protect your rights as a tenant, it’s essential to have a clear understanding of your lease terms and to obtain proper authorization before subletting your rental unit. Additionally, subletting may be subject to approval from homeowners associations or local municipal authorities, depending on the jurisdiction.
Property owners should secure the necessary permissions, and tenants should review their lease agreements and consult with their landlords before listing a property as a homestay.
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What is the maximum length of stay?
In India, there is no nationwide regulation specifying a maximum length of stay for homestays. However, local regulations and housing society rules may impose restrictions. In popular cities like Mumbai, Delhi, and Bengaluru, the length of stay for homestays typically ranges from one night to less than three months, depending on the rental platform and property type.
The maximum length of stay can also vary based on the nature of the property and the number of guests. For example, holiday homes in tourist areas may have different regulations compared to business apartments in urban centers. Hosts should familiarize themselves with local laws and platform-specific policies to ensure compliance with the maximum length of stay regulations.
Is there any National Registration Requirement or Permit?
In India, the requirement for registering homestay properties varies by state and local jurisdiction. Some states and cities mandate that hosts register their properties with the local municipal authority or obtain a permit to operate legally. The process typically involves submitting an application, paying a fee, and providing necessary documents such as property ownership proof, identification, and safety compliance certificates.
For example, in cities like Mumbai and Delhi, hosts may need to obtain a license from the local municipal corporation. The fees and documentation requirements vary, but generally include proof of ownership, identity verification, and a no-objection certificate from the housing society or landlord. Hosts should check with their local authorities for specific registration and permit requirements.
Is there a need for Permission from Landlord/Local Council/Neighbors?
In India, tenants typically need their landlord’s permission to operate homestays. It’s essential to have a clear, written agreement with your landlord outlining the terms of the homestay arrangement. This not only protects your interests but also helps avoid conflicts and serious legal issues, including the risk of eviction in the future.
Is Short-term rental Income taxable?
Income earned from homestays in India is subject to taxation. Hosts must report rental income on their annual tax returns and may be liable for goods and services tax (GST) if their rental income exceeds a certain threshold. Additionally, local taxes such as property tax and tourist tax may apply, depending on the location of the rental property.
Homestays in India are subject to various taxes, which can include national, state, and local taxes. Here’s a detailed overview:
Goods and Services Tax (GST)
-Applicability: GST applies to homestays when the annual turnover exceeds ₹20 lakhs (₹10 lakhs in special category states).
- Rate: The GST rate for renting out commercial properties is typically 18%, while residential properties rented for commercial purposes can also attract an 18% GST rate.
- Input Tax Credit (ITC): Hosts can claim ITC for GST paid on expenses related to homestays.
Income Tax
- Applicability: Income earned from homestays is subject to income tax and should be declared under “Income from House Property” or “Income from Business/Profession” based on the nature and scale of the rental activity.
- Tax Rates: The income tax rates depend on the taxpayer’s total income and applicable tax slabs.
- Deductions: Hosts can claim deductions for municipal taxes paid, standard deductions (30% of net annual value), and interest on home loans.
Municipal Taxes
- Property Tax: Hosts are required to pay property tax to the local municipal corporation. The rate and calculation method vary by city and property type.
TDS (Tax Deducted at Source)
- TDS on Rent: If the annual rental income exceeds ₹2.4 lakhs, the tenant (if an individual or HUF) must deduct TDS at 5%. For other entities, the rate is 10%.
- GST TDS: In certain transactions, especially those involving business entities, GST TDS may also be applicable.
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Is there any National Tourism Fund or Tourist Tax?
In India, tourist-related taxes are primarily imposed through the Goods and Services Tax (GST), which has subsumed the older luxury tax. The specific GST rate applied to hotel accommodations is tiered based on the room tariff.
For room rates falling between ₹1,000 and ₹7,500 per day, a 12% GST is levied. However, for accommodations priced above ₹7,500 per day, the GST rate jumps to 18%. While this tax structure is uniform across the country, the overall tax burden on tourists can vary due to the interplay of GST with other local taxes and additional charges imposed by individual establishments or state governments.
Is there any Guest Registration and Reporting Requirement?
In India, hosts are required to register and report guest information to local authorities for foreign guests only. This includes providing details such as guest names, passport information, and duration of stay to the local police or immigration authorities, overseen by the Foreigners Registration Office (FRRO) to ensure compliance with immigration laws.
There is no national requirement to register local guests; however, hosts should check their local jurisdictions to confirm whether any local regulations require such registration. Failure to register foreign guests can result in penalties and legal issues, so it’s crucial for hosts to understand and comply with these regulations
Is there any National Health and Safety Requirements?
India has national health and safety standards that homestay properties must adhere to, ensuring the well-being and safety of guests. The regulatory framework for homestays in India is multifaceted. The National Building Code (NBC) serves as the foundational guideline, establishing essential standards for structural integrity, fire safety, sanitation, and overall occupant well-being. However, the regulatory landscape extends beyond the NBC. State-specific laws and regulations, in conjunction with the oversight of the Ministry of Tourism, play a crucial role in classifying and approving accommodation establishments. This comprehensive approach ensures that homestays adhere to a robust set of safety and quality standards. These standards include basic requirements such as fire safety measures, sanitation, and structural integrity of the property. Hosts must ensure that their properties meet these standards and provide necessary safety equipment such as fire extinguishers and first-aid kits.
Additionally, some states and cities may have specific health and safety regulations for homestays. Compliance with these standards is crucial for obtaining permits and avoiding penalties. Hosts should check with local authorities for detailed health and safety requirements applicable to their properties.
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Is there any Platform Accountability Requirement?
Online platforms facilitating homestays in India are required to ensure that listings comply with national and local laws and regulations. This includes verifying the identity of hosts, ensuring the accuracy of property listings, and enforcing compliance with safety and zoning regulations. Platforms like Airbnb and Booking.com have policies in place to monitor and remove non-compliant listings. Airbnb is obligated to act as a tax withholding agent for Indian hosts. .They may be required to share data with government authorities for regulatory compliance. Effective October 1, 2020, the platform must deduct 1% of a host’s gross earnings and remit this amount to the Indian tax authorities. If the host fails to provide their PAN (Permanent Account Number), Airbnb is required to withhold tax at a higher rate of 5%.
Platforms must ensure transparency in their data collection and sharing practices and comply with Indian data protection laws.
Is there any Anti-Discrimination Law?
India has national laws that prohibit discrimination against guests in homestays. The Indian Constitution guarantees equal rights and protection against discrimination based on race, religion, caste, sex, or place of birth. These laws apply to all forms of housing, including homestays, ensuring that all guests have equal access to accommodation.
Hosts must adhere to these anti-discrimination laws and provide fair treatment to all guests. Any discriminatory actions can result in legal action and penalties. Online platforms also enforce strict anti-discrimination policies, and non-compliant hosts may be banned from listing their properties.
Is there any Data Sharing Requirements?
Homestay platforms in India may be required to share data with national government authorities for regulatory and security purposes. This includes sharing information about hosts, guests, and rental transactions with authorities such as the Ministry of Home Affairs and local police departments. The data-sharing requirements aim to ensure compliance with national laws and enhance security measures.
Hosts should be aware of these requirements and ensure that their rental operations are transparent and compliant with data-sharing regulations. Platforms like Airbnb and Booking.com typically handle data sharing with authorities, but hosts may need to provide additional information as required.
Is there any National Insurance Requirement?
While there is no specific national insurance requirement for homestay properties in India, hosts are encouraged to have liability insurance to protect against potential damages or legal claims. Liability insurance covers incidents such as property damage, guest injuries, and other liabilities that may arise during a guest’s stay.
Hosts should assess their insurance needs based on the nature of their property and potential risks. It is advisable to consult with an insurance provider to determine the appropriate coverage and ensure that the rental property is adequately protected.
Is there any National Zoning law/Cultural Heritage law?
India has zoning laws and cultural heritage regulations that may impact homestays, particularly in areas designated as culturally or historically significant. These regulations aim to protect the integrity and character of heritage sites and prevent commercial activities that could disrupt the local environment.
Hosts operating homestays in such areas must comply with zoning laws and obtain necessary permissions from local authorities. This may include restrictions on the type of rental activities allowed and adherence to conservation guidelines to preserve the cultural heritage of the area.
Is there any Environmental Regulations that affects STR?
Environmental regulations in India may impact homestays, particularly regarding waste management, water usage, and energy conservation. Hosts are required to comply with national and local environmental standards to minimize the environmental footprint of their rental properties. This includes proper waste disposal, efficient water usage, and adopting energy-saving measures.
Sustainable practices such as using renewable energy sources, reducing plastic usage, and promoting eco-friendly amenities are encouraged to support environmental conservation efforts. Hosts should stay informed about environmental regulations and incorporate sustainable practices in their rental operations.
Is there any National Tenant Protection Law?
India has national tenant protection laws that safeguard the rights of long-term tenants and prevent eviction for the sole purpose of converting properties into homestays. These laws ensure that tenants have security of tenure and are protected from unfair eviction practices. Landlords must follow legal procedures for eviction and cannot displace tenants without valid reasons.
Hosts must be aware of these tenant protection laws and ensure that their homestay operations do not violate the rights of long-term tenants. Compliance with these laws is essential to avoid legal disputes and maintain ethical rental practices.
Is there any Reporting Requirements for Foreigners?
Hosts must register foreign guests with the Foreigners Regional Registration Office (FRRO) within 24 hours of their arrival. This is typically done through the C-Form www.indianfrro.gov.in
Is there any Digital Platform Regulation Compliance?
Yes, digital platforms like Airbnb and Vrbo must comply with several regulations and guidelines, both at the national and local levels before they can operate in India:
- Legal Entity Registration: Platforms must be registered as legal entities in India. This could be through a subsidiary, joint venture, or other forms of business registration under Indian law.
- GST Registration: Platforms that facilitate transactions must register for Goods and Services Tax (GST) in India. They are required to collect and remit GST on the service fees charged to hosts and guests.
- Data Localization: Depending on the services they offer, platforms may need to comply with India’s data localization laws, which require certain types of data to be stored on servers within the country.
- Consumer Protection Act: Platforms must adhere to the Consumer Protection Act, 2019, which mandates fair trade practices, transparency in pricing, and grievance redressal mechanisms.
- Compliance with Local Laws: In addition to national regulations, platforms must ensure that their operations comply with local laws and regulations in each state or municipality they operate. This includes zoning laws, local taxes, and short-term rental regulations that may vary by region.
- Guest Registration and Reporting: As mentioned earlier, platforms must ensure that hosts comply with the requirement to register foreign guests with local authorities. While the platform itself may not directly handle this, they often provide guidance to hosts on compliance.
- Tax Collection and Reporting: Depending on their arrangements and collaborations with local jurisdictions, platforms may be responsible for ensuring that taxes related to transactions, such as GST or local hospitality taxes, are accurately collected and reported.
Is there any Consumer Protection Law that affect STR?A
In India, homestay contracts are influenced by various consumer protection laws to ensure fair practices and protect the rights of consumers.
The Consumer Protection Act, 2019 provides a comprehensive framework for protecting consumer rights and addresses unfair trade practices, defective services, and grievances. It ensures that homestay providers offer services that meet certain quality standards and allows consumers to seek redressal for any issues encountered during their stay. The Indian Contract Act, 1872 governs the formation and enforcement of contracts in India. It ensures that homestay agreements are legally binding, clear, and fair.
The Ministry of Tourism issues guidelines and standards for accommodation providers, including homestays. Homestay providers must comply with GST regulations, which ensure transparency in pricing and taxation. This helps consumers understand the cost breakdown and ensures that they are not overcharged.
These laws collectively ensure that homestay contracts in India comply with consumer protection standards, providing a fair and safe experience for guests.
Is there any Law that applies to Non-resident Owners?
Non-resident owners of homestay properties in India may be subject to specific regulations and additional taxes. These regulations can include residency requirements, higher tax rates, and restrictions on the number of properties that can be owned. Non-resident owners must comply with national and local laws to avoid penalties and legal issues.
Is there any classification of STR in the country?
India doesn’t have a specific, standardized classification system for homestays. However, based on the nature of the property and the services offered, we can broadly categorize them as follows: Entire Homes: These include apartments, villas, houses, and cottages rented out in their entirety. Rooms: This category covers individual rooms within a shared property, similar to a guesthouse or hostel. Homestays: These are typically family homes that offer rooms or entire spaces to guests, often providing a more personalized experience.
Are there Special National Event Regulations?
During national events or holidays, there may be additional regulations affecting homestays in India. In cities like Mumbai and Delhi, during major festivals and events like Ganesh Chaturthi, Republic Day and Independence Day, local authorities may impose specific regulations on homestays to manage the influx of visitors. Heightened security measures and guest reporting requirements are common.
These regulations can include changes in the maximum length of stay, stricter ID verification, imposed curfews, and noise restrictions to ensure public safety and order. Hosts must stay informed about these special regulations and comply with any temporary measures imposed by local authorities.
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Is there any Penalty for Violating National Rules?
Penalties for violating national rules and regulations governing homestays in India can include fines, legal action, and property seizure. Non-compliance with registration requirements, safety standards, tax obligations, and other regulations can result in severe consequences for hosts. Authorities may impose penalties based on the severity of the violation and the impact on public safety and order.
Hosts must ensure that their rental operations comply with all national and local laws to avoid penalties and maintain a lawful and ethical business. Staying informed about regulatory changes and seeking professional advice can help hosts navigate the complex legal landscape of homestays in India.
Are there National Rules or Regulations Governing Short-Term Rentals in the Country?
In India, the short-term rental market is primarily regulated by state and local laws rather than national ones. However, several general guidelines exist, which homeowners must follow. These generally fall under the Shop and Establishment Act of the respective states. Also, it’s the homeowner’s responsibility to ensure their rental adheres to local zoning and housing laws and doesn’t violate their terms of their mortgage, homeowners association regulations, or lease agreement.
Any income generated from rental property should be declared under the ‘Income from House Property’ for income tax purposes. Property owners are also required to pay Goods Services Tax (GST) on rental income if the annual aggregate turnover exceeds the tax threshold set by the government. For parties involved in short-term rentals, due diligence is also required to ensure that KYC norms are met to minimize the chance of any illegal activities.
Additionally, some states in India have started to develop policies specifically regarding short-term rentals and platforms like Airbnb. For example, Maharashtra state government has guidelines regulating Bed & Breakfast establishments.
It’s also crucial to understand that different rules apply to properties designated as ‘commercial’ and those designated as ‘residential’. This is a complex field with a lot of variables, so it’s recommended to seek professional advice or consult a lawyer before conducting short-term rentals in India.
Is there any National Tax that affects short-term rental?
Yes, there is a tax applicable to short-term rentals in India. It’s called the Goods and Services Tax (GST). As per the GST law, short-term rentals are considered a service. Therefore, they’re subject to a tax rate of 18% if the tariff is more than INR 1000 per day. However, if the annual aggregate turnover is less than 20 lakh INR in a financial year, you are not required to collect GST. Additionally, the Indian Income Tax Act considers income from short term rentals as income from other sources and it is taxable as per the individual’s tax slab. Please consult with a tax expert to ensure you are managing your taxes effectively.
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