No GST on room rentals at ‘sarais’ run by religious and charitable trusts; Report

The Finance Ministry has stated that the Goods and Services Tax will not apply to room rents in ‘sarais’ (inns) or properties managed by religious and charitable institutions. The clarification was issued by the Central Board of Indirect Taxes and Customs (CBIC) on Thursday evening to clarify the levy of GST on room rents.

The Finance Ministry issued this clarification in response to a demand from various sources, including AAP MP Raghav Chadha, that the GST on rooms rented by religious institutions be removed. Chadha met with Finance Minister Nirmala Sitharaman on Thursday and submitted a letter requesting the decision to impose a 12% GST on ‘sarais’ (inns) near the Golden Temple in Amritsar withdrawn.

The GST Council decided in June to levy a 12% tax on all hotel rooms that cost less than Rs 1,000 per day. After the GST proposal on room rents less than Rs 1,000 per day went into effect on July 18, 2022, certain ‘sarais’ managed by the Shiromani Gurdwara Parbandhak Committee (SGPC) on their own began collecting GST for rents up to Rs 1,000 per day.

According to the recommendation of the 47th GST Council, hotel rooms with room rents of up to Rs 1,000 per day were moved from the previously exempt category to the GST rate slab of 12%. However, the GST is not applicable to charitable or religious trusts renting rooms in religious trusts, the CBIC under the Finance Ministry said in a series of tweets.

Another exemption exempts charitable or religious trusts from renting rooms in religious precincts if the amount charged for the room is less than Rs 1,000 per day, it said, adding that this exemption remains in effect without change. ‘In terms of the above notification, the precincts of a religious place must be given a broader meaning to include a Sarai even if it is located outside the boundary wall of a complex of a religious place, in the surrounding area, and managed by the same trust/management,’ said another tweet.

The Centre has consistently held this position, even prior to the implementation of GST, it said, adding that state tax authorities may hold the same position in their jurisdiction. The three Sarais managed by the SGPC in Amritsar — Guru Gobind Singh NRI Niwas, Baba Deep Singh Niwas, and Mata Bhag Kaur Niwas — have begun paying GST as of July 18, 2022. ‘ These sarais managed by the SGPC may thus avail of the above-mentioned exemptions in respect of renting rooms by them,’ it said.