Starting a PG in Your House: Licence, Police Registration and GST
To run a PG from your house you need a municipal trade licence, police records of every resident, fire clearance where your city or building height demands it, and FSSAI registration if you serve meals. GST is exempt on beds of up to Rs 20,000 a month per person let for 90 days or more. Bengaluru now enforces 70 sq ft per resident, and Delhi is drafting a PG law.
Key takeaways
- A PG is a business run from a residential building. The municipal trade licence is the core permission; without it, cities are sealing PGs.
- Bengaluru's rules, backed by a Karnataka High Court order of 10 September 2026, require 70 sq ft per resident, CCTV in common areas, fire and electrical safety, and police-verified staff.
- GST: long-stay beds of up to Rs 20,000 per person a month, let for 90 continuous days or more, are exempt since 15 July 2024.
- FSSAI basic registration now covers food businesses with turnover up to Rs 1.5 crore, from 1 April 2026.
- Expect commercial electricity tariffs and a society or RWA that may object. Price both in before converting.
The licences and registrations, one by one
| Requirement | Who issues it | When it applies | Key figure |
|---|---|---|---|
| Trade licence | Municipal body (BBMP/GBA, GHMC, MCD and others) | Every PG | Fee set by the city; Bengaluru checks compliance every six months |
| Resident and staff records | Local police station | Every resident; staff verification now required in Bengaluru | Form C within 24 hours for any foreign resident |
| Fire clearance | State fire service | Karnataka's statutory NOC applies above 15 m; BBMP also asks converted buildings for fire clearance before licensing | 15 m height line (Karnataka) |
| FSSAI | Food Safety and Standards Authority | If meals are served | Basic registration up to Rs 1.5 crore turnover |
| GST | GST department | Beds above Rs 20,000 a month, or stays under 90 days | Exempt at or below Rs 20,000 per person a month for 90+ days |
The municipal trade licence
Bengaluru: the strictest rules so far
BBMP's order of 7 August 2024 set ten conditions for a PG trade licence: at least 70 sq ft per resident, CCTV at entrances, exits and corridors with 90 days of footage, a daily water supply of 135 litres per person, a guard round the clock, displayed helpline numbers, a first-aid kit and waste segregation. A building converted into a PG must hold fire safety clearance before it applies, and a mass kitchen needs an FSSAI licence. Health officers check compliance every six months and can revoke a licence without notice.
The Karnataka High Court has since hardened this. In a hearing where the civic body reported that about 2,500 of roughly 5,000 PGs in Bengaluru East were operating illegally, the court's order of 10 September 2026 required every PG to hold a valid trade licence, run from a building approved for the use, give each resident at least 70 sq ft, meet fire and electrical safety standards, keep CCTV out of rooms and bathrooms, and have staff police-verified. Corridors, staircases, balconies and parking areas cannot become sleeping space.
Hyderabad and Delhi
In Hyderabad, a hostel or PG needs a GHMC trade licence, with fire clearance handled separately by the state fire service. In July 2026 the police and GHMC began requiring women's hostels and PGs to register with the local police station, after a survey of 447 women's hostels found that fewer than 39% had fire safety systems.
Delhi has no dedicated PG law yet. After a PG building collapsed in Satya Niketan on 6 September 2026, killing at least seven people, the government proposed a Paying Guest Accommodation Regulation and Welfare Bill, 2026. As reported, it would require an operating licence within 90 days, police and municipal NOCs, a registration number for each PG, a public portal, and CCTV with 30 days of recordings. Until it passes, Delhi owners should assume municipal and police requirements apply and that enforcement is tightening.
Police records and resident checks
Every resident should be verified with the local police, using the same process landlords use for tenants and described in our guide to tenant police verification. Keep a register with ID copies, arrival and departure dates and an emergency contact. Bengaluru now also requires police verification of guards, cooks and other staff. For a foreign resident, any accommodation provider, PGs included, must file Form C on the e-FRRO portal within 24 hours of arrival.
Space, fire and building approval
The 70 sq ft rule decides your capacity, so measure before you buy beds. A 12 ft x 10 ft room is 120 sq ft: one resident at 70 sq ft, not two. A 12 ft x 12 ft room is 144 sq ft: two residents. A house with four bedrooms of 144 sq ft each can take eight people.
Karnataka's statutory fire NOC applies to buildings above 15 metres, and smaller residential buildings must still follow the National Building Code's fire and life safety rules. For PGs, BBMP goes further and asks converted buildings to hold fire clearance before licensing, so a low house does not escape the question. The High Court also wants PGs run from buildings approved for that use. If your house plan is sanctioned only as a dwelling, check with the municipality whether PG use needs a change before you invest. Our guide to commercial use of residential property covers how cities treat that.
GST, FSSAI and the running costs
GST
Since 15 July 2024, accommodation used as a residential dwelling is exempt from GST when the charge is Rs 20,000 or less per person a month and the stay runs for at least 90 continuous days. Beds above that price, or short stays, are taxable. Sources disagree on the rate for those: one says 18%, while others read the post-September 2025 rules as 5% without input credit for accommodation priced at up to Rs 7,500 a day, which covers almost every PG bed. Take a tax adviser's view if you have beds above the exemption line.
FSSAI
If you serve meals, you need FSSAI registration. From 1 April 2026, basic registration covers annual turnover of up to Rs 1.5 crore, up from Rs 12 lakh, and registrations no longer expire unless cancelled. A house PG's kitchen will almost always fall in that band.
Electricity and property tax
Using a domestic connection for a business can attract back-billing and penalties. In Bengaluru, BESCOM's domestic LT-1 rate is about Rs 6.82 a unit and the commercial LT-3 rate about Rs 8.92 from May 2026. Many cities also assess property tax on business use at a higher rate. Ask the municipality how a PG in your area is assessed before you convert.
Worked example: an eight-bed house PG in Bengaluru
Four bedrooms of 144 sq ft each, two residents per room, eight beds at an assumed Rs 12,000 a month with meals. Beds, rent and consumption are illustrative:
- Full occupancy revenue: 8 x Rs 12,000 x 12 = Rs 11,52,000 a year.
- GST: each bed is below Rs 20,000 a month, so long stays of 90+ days are exempt. Revenue is also below the Rs 20 lakh registration threshold.
- FSSAI: turnover is far below Rs 1.5 crore, so basic registration applies.
- Electricity: at 1,200 units a month, the gap between commercial and domestic rates is 1,200 x (Rs 8.92 - Rs 6.82) = Rs 2,520 a month, or Rs 30,240 a year.
- At 75% average occupancy, revenue falls to Rs 8,64,000, before food, staff, a guard, CCTV and repairs.
Compare that with letting the whole house to one family: fewer licences, no staff, no food. Our rental yields by city gives a benchmark for that option.
When a PG is the wrong call
- A flat in a society. A PG in an apartment runs into bye-laws, neighbours and common-area rules; societies often object to many unrelated occupants.
- A house not approved for the use. Bengaluru's court order makes building approval a licensing question, not a technicality.
- An absent owner. A PG is a daily operation: food, security, complaints, police records.
- Owners who want short stays. Nightly guests are a different business with different rules, covered in the sibling guide to short-term rental rules.
For the investment side of room-by-room letting, including what purpose-built student housing earns, see our piece on co-living and student housing.
Frequently asked questions
Do I need a licence to run a PG in my own house?
Yes. A PG is a business, and the municipal trade licence is the core permission in cities such as Bengaluru and Hyderabad. Bengaluru also requires 70 sq ft per resident, CCTV in common areas, fire clearance for converted buildings and police-verified staff. Delhi has no PG law yet but proposed one in September 2026 requiring an operating licence within 90 days.
Is GST payable on PG rent?
Not on most long-stay beds. Since 15 July 2024, residential accommodation of Rs 20,000 or less per person a month, for a continuous stay of 90 days or more, is exempt. Costlier beds or short stays are taxable, and sources disagree on whether the rate is 5% or 18%, so take a tax adviser's view if you run such beds.
Do I need an FSSAI licence if my PG serves food?
You need FSSAI registration. From 1 April 2026 basic registration, the simplest tier, covers food businesses with annual turnover up to Rs 1.5 crore, raised from Rs 12 lakh, and registrations no longer expire unless cancelled. A house PG kitchen will almost always fit within basic registration rather than a state licence.
How many residents can I put in one room?
In Bengaluru, at least 70 sq ft per resident, a rule the Karnataka High Court reinforced in September 2026. A 120 sq ft room takes one person, a 144 sq ft room two. Corridors, balconies, staircases and parking areas cannot be used as sleeping space. Check your own city's norms, which may differ.
Will I have to pay commercial electricity rates?
Very likely. Running a business on a domestic connection can bring back-billing and penalties. In Bengaluru the commercial LT-3 rate is about Rs 8.92 a unit against Rs 6.82 domestic; at 1,200 units a month that adds about Rs 30,240 a year. Ask your distribution company how PG use is classified.
If you are weighing whether a house will earn more as a PG or a family let, Realty Hunting can help you compare the numbers and the approvals involved.
