Religious institutions’ rented rooms and stores will be subject to GST: TAAR

The Telangana Authority for Advance Ruling (TAAR) has ruled that a benevolent religious institution must pay GST (Goods and Services Tax) on rooms rented to devotees and stores rented to religious programming if the rent is higher than Rs. 1,000 per day and Rs. 10,000 per month, respectively.

AAR’s jurisdiction

Despite the fact that AAR’s rules only apply to applicants and jurisdictional tax authorities, they are mentioned in similar circumstances. Many of these judgements have also served as the foundation for tax department notices and circulars.

Acharya Shree Mahashraman Chaturmas Vyvastha Samiti, established in Hyderabad, is a charity religious organisation. During Chaturmas, it rents out space on a temporary basis. Because it does not engage in this activity for profit, it sought clarification on the subjectivity of their supplies to GST.

It requested an advance judgment on whether it is required to pay GST on renting temporary residence rooms for consideration to devotees and renting space for shops and stalls for religious programming where the primary goal is not to do commerce but to spread religion. Furthermore, if yes, it wanted to know if GST will be applied if the daily rate for the room is less than Rs. 1,000 and the monthly rent is less than Rs. 10,000.

Notification of GST

After reviewing the facts, the AAR took note of a GST notification dated July 27, 2017, which mentioned an exception for services provided by a business registered under Income Tax and engaged in charity operations. AAR further emphasised entry 13 of the notification, which provides an exception for services relating to the conduct of any religious ceremony and the renting of precincts of a religious place intended for the general public.

However, according to AAR, this exemption will not be accessible if the rent is Rs. 1,000 or higher. Similarly, no exemptions will be granted for renting premises, community halls, kalyanmandapams, or open areas, and the like where the costs are Rs. 10,000 or more per day, or for stores or other commercial spaces where the prices are Rs. 10,000 or more per month.

To Read the Ruling Download PDF Given Below: