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Telangana Authority for Advance Ruling (TAAR) has held that a a charitable religious institution will be liable to pay GST (Goods & Services Tax) on renting of rooms to devotees and shops for religious programmers provided rent is more than ₹1,000 a day and ₹10,000 per month, respectively.
AAR jurisdiction
Though AAR’s orders are applicable only on applicants and jurisdictional tax officers, they are cited in similar cases. Many such rulings have also become the basis for notifications and circulars by tax department.
The applicant — Hyderabad-based Acharya Shree Mahashraman Chaturmas Vyvastha Samiti — is a charitable religious institution. It provides space for rent on temporary basis during chaturmas. As it doesn’t perform this activity with a profit motive, it was desirous of clarification regarding exigibility of their supplies to GST.
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It sought advance ruling on whether it is liable to pay GST on renting of temporary residential rooms for consideration to the devotees and renting of space for shops and stalls for the purpose of religious programmers where the predominant object is not to do business but for advancement of religion. In addition, if yes, it sought to know if GST will be levied in case per day rent for the room is less than ₹1,000 and per month rent is less than ₹10,000.
GST notification
After going through the facts, the AAR took note of a GST notification dated July 27, 2017, which talked about exemption for services provided by an entity registered under Income Tax providing charitable activities. Further, AAR highlighted entry 13 of said notification which prescribes exemption for services related to conduct of any religious ceremony and renting of precincts of a religious place meant for general public.
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However, AAR noted that this exemption will not be available in case rent is ₹1,000 or more. Similarly, exemptions will not be available for renting of premises, community halls, kalyanmandapam or open area, and the like where charges are ₹10,000 or more per day, or for shops or other spaces for business or commerce where charges are ₹10,000 or more per month.
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