The Mega Exemption Notification 25/2012, entry no. 5(a) provides exemption to:

Services by a person by way of renting of precincts of a religious place meant for general public.

Recently, the Ministry of Finance (Department of Revenue) vide Notification 40/2016 ST dated 06-09-2016, has amended the said entry 5(a), with the following:

“Services by a person by way of renting of precincts of a religious place meant for general public, owned or managed by an entity registered as a charitable or religious trust under section 12AA of the Income-tax Act, 1961(hereinafter referred to as the Income-tax Act), or a trust or an institution registered under sub clause (v) of clause (23C) of section 10 of the Income-tax Act or a body or an authority covered under clause (23BBA) of section 10 of the Income-tax Act”

Thus, now the exemption is being restricted, to be given only if: the religious place which is meant for general public is owned or managed by either:

1. entity registered as a charitable or religious trust under section 12AA of the Income-tax Act

2. a trust or an institution registered under sub clause (v) of clause (23C) of section 10 of the Income-tax Act

3. a body or an authority covered under clause (23BBA) of section 10 of the Income-tax Act

Further, Ministry of Finance (Department of Revenue), Tax Research Unit, vide Circular no. 200/10/2016 dated 6th September, 2016 has clarified the issues faced by industry in implementing the said entry 5(a) of the mega exemption notification. Doubts have been arising for the word “precincts”, as the same was not defined any wherein the act, though meaning of the word ‘renting’ & ‘General public’ both were defined under the Act, and this has given rise to difficulty/ disputes in interpreting the scope of the said exemption notification.

Now, vide this aforesaid circular, Ministry has referred to the case of CCE, Mangalore vs. Dakshina Kannada Mogaveera Mahajana Sangha, 2010(17) STR 258 (Tri.- Bang.) and the case of South-Eastern Coalfield Ltd. Vs. Commissioner of Customs and Central Excise, Madhya Pradesh (2006(200) ELT 357(S.C.)), and has clarified that word ‘precincts’ would consider all immovable property of the religious place located within the outer boundary walls of the complex (of buildings & facilities) in which the religious place is situated, as being located in the precincts of the religious place. The immovable property located in the immediate vicinity and surroundings of the religious place and owned by the religious place or under the same management as the religious place, may be considered as being located in the precincts of the religious place and thereby extended the benefit of said exemption.

Hence w.e.f. 06-09-2016, the exemption given under entry 5(a) will be provided only if the said religious place is managed or owned charitable entities as specified in the Income Tax Act and further the word ‘precincts’ is to be given a wider meaning.