CBIC clarifies GST exemption on rooms of 'sarais' managed by religious/charitable bodies

NEW DELHI: The finance ministry said GST will not apply to 'sarais' (inns) or properties that are managed by religious and charitable institutions.

The Central Board of Indirect Taxes and Customs (CBIC) issued a clarification on Thursday evening to clear the confusion regarding the levy of GST on room rent.

This clarification by the finance ministry came following demands from various quarters, including AAP MP Raghav Chadha, to withdraw GST on rooms rented by religious institutions.

On Thursday, Chadha met Finance Minister Nirmala Sitharaman and submitted a letter regarding withdrawing the decision to impose 12 per cent GST on 'Sarais' (inns) located near the Golden Temple in Amritsar.

In June, the GST Council had decided to levy a 12 per cent tax on all hotel rooms priced below Rs 1,000 per day.

Certain 'sarais' managed by the Shiromani Gurdwara Parbandhak Committee (SGPC) on their own started collecting GST for rents up to Rs 1,000 per day after the GST proposal on room rents below Rs 1,000 per day came into force on July 18, 2022.

As per the recommendation of the 47th GST Council, hotel rooms having room rents up to Rs 1,000 per day were brought under the GST rate slab of 12 per cent from the earlier exempt category.

However, GST is not applicable on room rent in religious precincts by charitable or religious trusts, the CBIC under the Finance Ministry said in a series of tweets.

There is another provision which exempts renting of rooms in religious precincts by a charitable or religious trust, where the amount charged for the room is less than Rs 1,000 per day, it said, adding this exemption continues to be in force without any change.

"The precincts of a religious place, in terms of the above notification, have to be given 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," another tweet said.

The Centre has consistently taken this view in the pre-GST administration as well, it added, adding that state tax authorities may also take the same view in their respective jurisdictions.

It has been noticed that three sarais -- Guru Gobind Singh NRI Niwas, Baba Deep Singh Niwas and Mata Bhag Kaur Niwas -- managed by SGPC in Amritsar have started paying GST from July 18, 2022.

"These sarais managed by the SGPC may therefore avail the above-stated exemptions in respect of renting of rooms by them," it said.

(With PTI inputs)