A charitable trust providing accommodation to pilgrims visiting Ambaji Temple in a building located outside the boundary of the religious place will not get GST exemption, rules Gujarat’s Authority for Advance Rulings (GAAR).

The applicant Ahmedabad based Nandini Ashram Trust provides accommodation to pilgrims who visit the Ambaji Temple and the room rent is ₹1,000 per day. It is also engaged in providing a wide range of professional consulting services such as architecture, engineering, planning, urban design, landscape, sustainability, research and art, building design, interior design, surveying, environmental sciences, project management and project economics. It moved to AAR to seek advance ruling on whether it needs GST registration and whether the services come under the purview of GST regime.

After examining the facts and arguments, AAR has highlighted relevant paragraph of GST flyer relating to GST on Charitable and Religious Trusts which makes it clear that income from charitable activities such as public health, advancement of spirituality, yoga, advancement of educational programs or skill development and preservation of environment, including watershed, forests and wildlife are exempted.

“There could be many services provided by charitable and religious trust which are not considered as charitable activities and hence such services come under GST net. The indicative list of such services includes renting of premises by such entities, grant of sponsorship and advertising rights during conduct of events/functions etc.,” the bench said.

It highlighted that under chapter 39 of the GST flyer, relating to GST on charitable and religious trusts, it is clarified that law gives a limited exemption to renting of only religious precincts or a religious place meant for general public by the entity registered under the lncome Tax Act.

The term “religious place” means a place which is primarily meant for conduct of prayers or worship pertaining to a religion, meditation, or spirituality. Dictionary meaning of “precincts” is an area within the walls or perceived boundaries of the particular building or place, an enclosed or clearly defined area of ground around a cathedral, church, temple, etc.

This implies that if immovable properties owned by charitable trust like marriage hall, convention hall, rest house for pilgrims, shops situated within the premises of a religious place are rented out, income from letting out of such property is exempt from GST. However, this exemption will not be available if charges for renting of rooms exceeds ₹1,000 per day or charges for renting the premise exceeds ₹10,000 per day.

If properties are not situated in the precincts of a religious place i.e. not within walls or boundary walls of the religious place, income from such letting out will lose the exemption and income from it will be liable to GST, AAR said while quoting GST flyer.

When asked by AAR whether the Nandini Ashram is owned by the trust managing the Ambaji Temple, the authorised representative of the applicant answered in negative. On being further asked whether the rooms of Nandini Ashram which they were renting to pilgrims is located in the precincts of the Ambaji Temple, he informed that it was not within the boundary of the temple.

“Going by the definition of precinct, it is emphatically clear that the applicant is not eligible for the benefit of the notification,” AAR said. Also, it held that applicant is liable for registration, if its turnover is more than ₹20 lakh per annum.

Source: The Hindu Business Line
https://www.thehindubusinessline.com/economy/no-gst-exemption-on-accommodation-to-pilgrims-outside-religious-place-by-charitable-trust-gujarat-aar/article66815094.ece