GST exemption on residential programs for advancement of religion, spirituality or yoga

Government of India, Ministry of Finance, Department of Revenue, vide Circular No. 66/40/2018-GST dated: 26th September 2018 has clarified that there will no GST on residential programs or camps meant for advancement of religion, spirituality or yoga by organizations registered u/s 12AA of Income tax.

The circular states:

“The services provided by entity registered under Section 12AA of the Income Tax Act, 1961 by way of advancement of religion, spirituality or yoga are exempt. Fee or consideration charged in any other form from the participants for participating in a religious, Yoga or meditation programme or camp meant for advancement of religion, spirituality or yoga shall be exempt. Residential programmes or camps where the fee charged includes cost of lodging and boarding shall also be exempt as long as the primary and predominant activity, objective and purpose of such residential programmes or camps is advancement of religion, spirituality or yoga. However, if charitable or religious trusts merely or primarily provide accommodation or serve food and drinks against consideration in any form including donation, such activities will be taxable. Similarly, activities such as holding of fitness camps or classes such as those in aerobics, dance, music etc. will be taxable.

It is accordingly clarified that taxability of the services of religious and charitable trusts by way of residential programmes or camps meant for advancement of religion, spirituality or yoga may be decided accordingly.”

AAR’s Ruling

This clarification comes soon after the Authority of Advanced Ruling (AAR) for GST in Maharashtra ruled on 14th June 2018 that goods and services provided by charitable trusts for a consideration would classify as supply, making it liable for GST.

An application was filed under section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, by Shrimad Rajchandra Adhyatmik Satsang Sadhana Kendra. The trust in its application had argued that since its main activity was that of a charitable trust engaged in spreading religious knowledge by organising camps (satsang, shibirs), its ancillary activity of selling religious material in the forms of books, CDs, DVDs, pamphlets and statues shouldn’t be considered as business.

AAR rejected the trust’s contention saying that some of its activities — providing accommodation for participants in camps and sale of merchandise — weren’t free and hence attracted GST.

“As such arranging residential or non-residential satsang/shibir/yoga camps by accepting/charging some amount from participants will not be covered under ‘charitable activities,” the AAR order stated. It further said that there is no exemption granted to charitable trusts in case of supply of goods which are taxable and are not specifically exempt or nil rated.

Conclusion: In India, religion and yoga continue to enjoy enormous direct and indirect tax benefits, while regular charitable organizations continue to get the short end of the staw.

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