Project Report for Paying Guest Accommodation
A paying guest accommodation business addresses one of the most persistent gaps in Indian urban housing: inexpensive, furnished, and managed housing for students and working professionals in places where rents are exorbitant and independent living is not yet feasible. The company is straightforward: rent or own a home, outfit it, and rent out beds or rooms to paying guests on a monthly basis. Sharda Associates creates CA-certified Paying Guest project reports. Starting at Rs. 2,999.
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What Is a PG Accommodation Business?
A Paying Guest (PG) Accommodation Business provides fully furnished rooms or shared beds to students, working professionals, and individuals seeking affordable monthly accommodation. Unlike hotels or traditional rental properties, PG facilities offer ready-to-move housing with essential amenities such as beds, wardrobes, Wi-Fi, housekeeping, electricity, security, and optional meal services. Demand is particularly strong near educational institutions, IT parks, commercial centres, and industrial areas where students and employees require convenient accommodation.
Entrepreneurs can establish a PG Accommodation Business by purchasing, leasing, or converting an existing property into furnished rental accommodation. Revenue is generated through monthly room or bed rentals and additional services such as meals and laundry. Profitability depends on occupancy rates, rental pricing, property costs, utilities, maintenance, and operating efficiency. Eligible PG businesses may explore MSME loans, MUDRA financing, and other service-sector business loans, subject to lender requirements and scheme eligibility. A Paying Guest Project Report helps assess investment requirements, projected income, operating expenses, and financial feasibility.
PG Accommodation vs Service Apartment — Key Difference
This page focuses on PG accommodation. For service apartments (fully serviced, higher-price, short-stay, corporate focus), see our Service Apartment project report page.
PG Accommodation | Service Apartment | |
Primary tenant | Students, young working professionals | Corporate travellers, relocating executives |
Stay duration | Monthly (3-12 months typical) | Nightly to monthly |
Pricing | Rs.5,000-20,000/month | Rs.1,500-6,000/night |
Meals | Sometimes included (mess model) | Usually not |
Location preference | Near colleges, IT parks, offices | Near business districts, hospitals |
Capital per unit | Lower | Higher |
Location — Where PG Businesses Work
The location of a Paying Guest (PG) Accommodation Business plays a major role in determining occupancy rates, rental income, and long-term profitability. Selecting a property near educational institutions, employment centres, hospitals, or coaching hubs can help attract consistent demand.
Near Colleges and Universities: Engineering colleges, medical institutions, management institutes, and universities attract students seeking affordable accommodation. A PG located within 1–3 kilometres of a major educational institution may benefit from convenient access and regular student demand. Actual occupancy depends on competition, pricing, facilities, and admission cycles.
IT Parks and Office Clusters: Working professionals relocating for employment often prefer furnished PG accommodation near IT parks, corporate offices, and industrial areas. Locations surrounding Infosys, TCS, Wipro, HCL, and other employment hubs can offer opportunities for PG businesses serving employees and trainees.
Near Hospitals and Medical Colleges: Medical students, nursing students, interns, and healthcare professionals frequently require accommodation close to hospitals and medical institutions. These locations can support relatively consistent rental demand throughout the year.
Government Examination Coaching Hubs: Cities such as Delhi, Prayagraj, Jaipur, and Bhopal attract students preparing for UPSC, SSC, State PSC, GATE, and other competitive examinations. PG accommodation near established coaching centres can generate demand from students seeking affordable housing during their preparation periods.
Revenue Model — Per Bed and Per Room
Single Occupancy Rooms: Private rooms in a Paying Guest (PG) Accommodation Business may generate approximately ₹6,000–₹18,000 per month, depending on location, city, furnishing quality, and facilities. Single occupancy rooms generally attract working professionals and students seeking greater privacy.
Double and Triple Sharing Rooms: Shared accommodation typically costs ₹4,000–₹9,000 per bed per month. Although individual rental charges are lower, multiple occupants can increase total revenue per room and improve space utilisation.
PG Accommodation with Meal Services: PG operators may offer breakfast, lunch, or dinner at an additional ₹2,000–₹4,000 per resident monthly. Meal services create additional revenue but also increase grocery, cooking, staffing, and kitchen maintenance expenses.
Illustrative Monthly Revenue Calculation: A 20-bed PG accommodation facility operating at 85% average occupancy, with a monthly rental charge of ₹8,000 per occupied bed, could generate:
20 Beds × 85% Occupancy × ₹8,000 = ₹1,36,000 Monthly Revenue
This represents approximately ₹16.32 lakh annual rental revenue, assuming consistent occupancy and pricing.
Operating Expenses: Major expenses include property rent, caretaker salaries, electricity, water, Wi-Fi, housekeeping, repairs, and meal preparation costs. Property rent may represent a significant portion of revenue, depending on location and lease terms. A Paying Guest Project Report evaluates these costs alongside occupancy projections, profitability, working capital, and loan repayment requirements.
GST on PG Accommodation
GST Applicability on Paying Guest (PG) Accommodation
Paying Guest (PG) accommodation businesses have specific GST exemption rules that should be considered while preparing a project report.
Under Notification No. 04/2024-Central Tax (Rate), effective from 15 July 2024, accommodation services are exempt from GST when charges do not exceed ₹20,000 per person per month, provided the accommodation is supplied for a minimum continuous period of 90 days.
For example, a PG charging ₹8,000–₹15,000 monthly per resident may qualify for GST exemption if the minimum stay requirement is satisfied. Shorter stays or accommodation charges exceeding ₹20,000 per person per month require separate GST evaluation under applicable rules.
A Paying Guest Project Report should consider accommodation charges, duration of stay, taxable services, GST registration requirements, and applicable exemptions to accurately calculate revenue and profitability.
Project Cost for PG Accommodation Business
Format | Capital Cost (Rs.) |
Small PG (10-15 beds, rented property) | Rs.4-10 lakh (furnishing, fit-out, advance rent) |
Medium PG (20-30 beds, owned or long lease) | Rs.10-25 lakh |
Large PG (40-60 beds, purpose-built or multiple floors) | Rs.25-60 lakh |
Property arrangement: Leased property – the principal operating cost is rent (paid monthly from revenue). Owned property is an investment in the property itself (much higher capital but no ongoing rent). The project report must state explicitly which arrangement applies.
Bed, mattress, study table, chair, wardrobe, drapes, and ceiling fan cost between Rs.15,000 and Rs.35,000 per room, depending on quality.
Why Choose Sharda Associates
45,500+ CA-Certified Project Reports: Sharda Associates has prepared over 45,500 project reports across various industries, including hospitality and accommodation businesses. Our Paying Guest Project Reports cover investment requirements, occupancy projections, operating expenses, profitability, and bank loan planning.
Leased vs. Owned Property Financial Planning: We prepare customised financial projections for both rented and owned PG properties. Leased properties include monthly rental expenses, while owned properties require higher capital investment and appropriate financing calculations.
Realistic Occupancy and Revenue Projections: New PG businesses generally require time to attract residents. Our reports consider phased occupancy assumptions, such as 30–40% during initial months, potentially increasing to 80–85% as the business develops, depending on location, demand, pricing, and competition.
GST Applicability and Compliance: We assess GST treatment based on accommodation charges, duration of stay, and applicable exemptions, including the ₹20,000 per person per month and minimum 90-day continuous stay conditions. Relevant tax considerations are incorporated into financial projections.
Meal Services and Additional Revenue: For PG businesses offering meals, laundry, or other facilities, we separately calculate additional revenue, food expenses, staffing costs, and operational requirements to estimate realistic profitability.
Affordable Project Reports and Quick Delivery: Get a customised CA-certified Paying Guest Accommodation Project Report covering project cost, working capital, projected financial statements, cash flow, and loan repayment calculations. Starting at ₹2,999 | Delivery within 24–48 working hours | All India Service.
📞 +91 89899 77769 | Contact Sharda Associates for your Paying Guest Project Report.
Frequently Asked Questions
A residential lodging service that rents furnished beds or rooms to students and working professionals on a monthly basis, offering controlled housing with basic utilities at a lesser cost than independent unit rentals. Monthly rent per occupied bed, sometimes with meals included for added value.
Yes, Mudra Kishore/Tarun is suitable for small PG enterprises (Rs.4-10 lakh to furnish a leased property). Larger PGs (Rs. 10-25 lakh) are suitable for the Mudra Tarun or PMEGP service sector. CA-certified project reports with occupancy-based income, property arrangement, and ramp-up staging are required.
Near colleges and universities (medical, engineering, and management students from other cities), IT parks and office clusters (new-city professionals), hospital areas (medical and nursing students, interns), and test preparation centers. Occupancy is nearly guaranteed near a large institution or IT park; the difficulty is location rather than marketing.
PG: shared accomodation for students and young professionals, Rs.5,000-20,000 per month, includes modest furnishings, occasional meals, and a monthly stay. Service apartment: completely serviced private unit for corporate travelers and executives, priced between Rs.1,500 and Rs.6,000 a night, with premium furnishings and daily housekeeping, available for nightly or monthly stays. Varying market segments have varying pricing and capital requirements.
PG lodging charged at more than Rs.1,000 per day (about Rs.30,000 per month) is subject to 12% GST. GST is not applicable on amounts less than Rs.1,000 each day. Most budget and mid-range PGs (Rs.5,000-10,000/month, or far below Rs.333/day) are GST-free. Premium PGs priced at Rs.15,000-20,000 or more per month may approach the threshold; right GST treatment must be mentioned in the project report.
Depends on the availability of capital. Leased property requires less initial expenditure (advance rent + outfitting), but monthly rent is a set running expense (usually 35-45% of earnings). Owned property: more capital but no monthly rent, increasing per-bed profitability dramatically once the loan is paid off. Most MSME-scale PG enterprises begin with a rented property; the bank loan is mostly for furnishing and advance rent deposits.
Starting at Rs.2,999, with 24-48 hour delivery. Property arrangement (leased versus owned), per-bed revenue model, occupancy ramp-up, GST treatment, meals revenue (if applicable), and Mudra or PMEGP format. If the bank has any concerns, they can request a free revision. Call +91 89899 77769.
A realistic occupancy ramp-up is required for bank approval. Most new PG companies begin with 30-40% occupancy in the first 2-3 months, increase to 50-65% occupancy by month 6, and settle at 75-90% occupancy in 12-18 months, depending on location and amenities. Projecting full occupancy from day one undermines the credibility of financial estimates. A professional project report should show gradual occupancy growth based on local demand, surrounding institutions, and market rivalry.