No GST on room rent of ‘sarais’ managed by religious or charitable trust; clarifies CBIC

The Goods and Services Tax (GST) is not applied to “sarais” administered by charity or religious trusts, according to a statement released by the Union Finance Ministry on Thursday.

After the decisions on the recommendations of the 47th GST Council meeting became effective on July 18, 2022, some “sarais” operated by the Shiromani Gurdwara Parbandhak Committee (SGPC) independently began collecting GST for rents up to Rs 1,000 per day.

According to the recommendation, hotel rooms with room rents up to Rs 1,000 per day were moved from the former exempt category to the GST rate slab of 12%.

However, the Central Board of Indirect Taxes & Custom under the Finance Ministry stated in a series of tweets that the GST is not chargeable on room rent in religious precincts by a charitable or religious trust.

It denied statements made on social media and through some media outlets that, starting on July 18, 2022, GST will be applied to all “Sarais” run by charity or religious trusts.

Using its official Twitter account, the Board posted yesterday that “some parts of the media and social media are circulating the impression that GST has lately been imposed with effect from 18 July, 2022 even on ‘Sarais’ run by religious/charitable trusts.” That is untrue.

The Board has made it clear that none of these Sarais have received any notices in this regard. These Sarais might have chosen to pay GST on their own.

In terms of the aforementioned notification, “the phrase “precincts of a religious place” must be given a broader definition to include a Sarai, even if it is situated beyond the perimeter wall of a complex of a religious place, in the neighbourhood, and managed by the same trust/management. Even during the pre-GST era, the Center constantly held this position. In their respective jurisdictions, state tax authorities might adopt the same stance. As a result, these Sarais administered by SGPC may benefit from the exemptions mentioned above while renting out rooms”, according to the CBIC.