Gujarat AAR: No GST Exemption On Accommodation To Pilgrims Outside Religious Places By Charitable Trust

Nandini Ashram Trust, located in Ahmedabad, offers lodging to pilgrims visiting the Ambaji Temple at a daily room rate of Rs. 1,000. Additionally, the organization provides an array of professional consulting services such as architecture, engineering, planning, urban design, landscape, sustainability, research, art, building and interior design, surveying, environmental sciences, project management, and project economics. 

The trust approached the AAR to obtain an advance ruling on whether GST registration is necessary for their operations and if their services fall within the scope of the GST regime.

Upon reviewing the facts and arguments presented, the AAR cited a pertinent section of the GST flyer that pertains to GST on Charitable and Religious Trusts. This section clarifies that revenue generated from charitable activities such as public health initiatives, promoting spirituality, yoga, educational programs, skill development, and environmental conservation (including watersheds, forests, and wildlife) are exempt from GST.

There may be several services offered by charitable and religious trusts that are not classified as charitable activities, and thus are subject to GST. These services may include the rental of premises by such organizations and the provision of sponsorship and advertising opportunities during events and functions conducted by them. The bench provided an indicative list of such services.

The bench emphasized that Chapter 39 of the GST flyer pertaining to GST on charitable and religious trusts clarifies that the law grants a partial exemption to the rental of only religious precincts or religious places that are open to the general public by entities registered under the Income Tax Act.

In the context of the GST regulations, the definition of "religious place" refers to a location primarily used for prayer or worship related to a particular religion, as well as for meditation or spiritual practices. 

The term "precincts" has a dictionary definition of an area within the boundaries of a particular building or location, including an enclosed or well-defined area of land surrounding a cathedral, church, temple, or similar religious establishment.

This means that when a charitable trust leases out its immovable properties, such as a marriage hall, convention hall, rest house for pilgrims, or shops located within a religious place, the revenue generated from such rental activities is not subject to GST. 

However, this exemption is applicable only if the daily room rental charge does not exceed Rs. 1,000 and the premises rental charge does not exceed Rs. 10,000.

As per the GST flyer, if the properties that are being leased out are not situated within the precincts of a religious place, which refers to the enclosed or defined area within the walls or boundaries of the place of worship, then the income generated from such rental activities will not be eligible for exemption and will be subject to GST. The AAR made this clarification.

The AAR asked whether the Nandini Ashram was owned by the trust that manages the Ambaji Temple, to which the authorized representative of the applicant responded in the negative. When questioned further about whether the rooms being rented out by Nandini Ashram were located within the precincts of Ambaji Temple, the representative clarified that the rooms were not situated within the boundaries of the temple.

Summing it up, The Gujarat Authority for Advance Rulings (GAAR) has ruled that a charitable trust providing accommodation to pilgrims outside the boundaries of a religious place will not get GST exemption. While the revenue generated from charitable activities is exempt from GST, certain services offered by charitable and religious trusts are subject to GST. Charitable trusts must carefully consider whether their services are eligible for GST exemption or not.

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