India is a religious voluntary. The temples are considered as “HOLY” and it is important to note that a temple can be registered under Section 12 AA of the Income Tax Act, 1961.
Generally Temples are being managed by the ‘TRUSTS”. The income and expenditure of the temples will be accounted in the books of TRUSTS”. Therefore, when we are talking about the taxability of income of temples, we have actually discussed about the taxability in the hands of Trusts. Trust is the person which has to get registered under Indian Trusts (Amendment) Act, 2016 (Act No.34 of 2016).
Generally, following procedures will be followed by the Temple Trusts while drafting Deeds, like objects, Accounts and Inspection ,Approval of reserves, , Expenses of the Trusts, Control of the Trusts and Winding up.
(i) OBJECTS: The purpose for which the Temple-Trust is formed is specified in this requirement. This is a crucial clause, as all the activities are undertaken for the awareness of these purposes only.
(ii) Accounts and Inspection: The trustees are expected to keep proper books of accounts of all the Liabilities, Assets, Income and Expenses of the temple and also get the reports reviewed by a “Qualified Chartered Accountant”.
(iii) Approval of Reserves: The Temples accept donations, Grants, recommendations, Aids from any person, Government, or any other Religious Organizations, by way of cash or kind, immovable properties without any cost on it, but it shall not take any such funds collected with the condition which is contradictory with the purposes of the Trust.
(iv) Expenses of the Trusts: It is the planning of the trustees to distribute the funds of the trust efficiently. The funds which are not expected shortly for meeting current needs should be bought in Securities, Banks FD’s and other expenses to get valuable returns in the same way as a advisable person would be the equivalent.
(v) Control of the Trustees: The Trustees can’t perform any act which is beyond their power specified in the trust deed. The trustees are frequently given the below skills for the overall management and supervision of the Trust.
Generally, the management of temples’ assets and Finances has traditionally been governed by Hindu Religious and Charitable Endowments Acts enacted by various States. These Acts aim to regulate temple administration, Protect Temple Assets and ensure the proper utilization of Funds of the Temples for Religious and Charitable Purposes.
Legal Provision: The taxation of temples is primarily governed by State Specific Laws, such as the Hindu Religious and Charitable Endowments Acts, which provide exemptions for income derived from Religious Activities, Donations and Offerings. Consequently, there have been instances where temples have been subjected to taxation on Commercial Activities like Provide accommodation by way of Rooms, Cottages on rental basis, Renting of Kalyana Mandala’s, Shops etc., on lease or rental basis or Conducting business projects etc.,
The legal challenges related to the taxation of Temples is the interpretation of Article 26 of the Constitution of India, which guarantees religious freedom and the right to manage Religious Affairs. The Hon’ble Supreme Court of India has issued several judgments clarifying the scope and limitations of State intervention in temple administration and taxation.
Now, we have to analyze the applicability of GST on activities of the Temples under GST Scenario. Under GST Law, firstly, we have to observe that whether the activities of the temple are considered as business under GST Law?
Definition of Business under GST Law,2017: As per Section 2(17) of the CGST Act,2017
“Business includes any Trade, Commerce, Manufacture, Profession, Vocation, Adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit”. The definition of the business seems extensive and it includes every kind of activity whether or not for monetary benefit. Therefore, the definition of business can be constructed as any activity whether or not for monetary benefits. Thus, even though there will be no monetary benefits arising to the temples, the same can’t be said as outside the ambit of “Business” under CGST Law,2017.
Definition of Supply under CGST Law,2017: As per Section 7 of the CGST Act,2017” Supply “ includes all forms of supply of goods and services or both such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business”.
Definition of Services under CGST Act,2017: As per Section 2(102) of the CGST Act,2017, defines as “Services” means anything other than goods. The activities a temple would form part of service as it includes everything other than goods.
Definition of “Religious Place”: The word “Religious Place” has been defined in the same Notification No.12/2017 –Central Tax, dt.28.6.2017 as “ Religious Place means which is primarily meant for conduct of prayers or worship pertaining to a religion, Meditation or Spirituality.
These following activities of the Temples will be considered as services as per Section 7 of the CGST Act,2017.
(i) Supply of Service,
(ii) Made for a consideration,
(iii) By a person (Temple is under a trust),
(iv) In the course or furtherance of business.
The intention of levy of tax under GST is to tax only the commercial purposes. Most of the services provided by the temples are covered under EXEMPTION LIST as per Entry No.1 of Notification No.12/2017 – CT (Rate) dt.28.6.2017,” Services by an entity registered under Section 12AA of the Income Tax 1961, by way of “Charitable Activities”.
The definition of Charitable Activities includes “Advancement of religion, Spirituality or Yoga etc.”. Thus, any service provided by the temple under a trust, which is registered in accordance with Sec.12AA of the Income Tax Act, 1962, by way of advancement of religion is “EXEMPT” under GST Law, 2017.
The temples could earn income in the form of Gifts or Donations by way of donations and Gifts from the devotees. Apart from that, there could be other incomes also like renting of rooms to pilgrims, Renting of Community Halls, Renting of immovable property for Shops, Sale of Prasad, Sale of Spiritual Books, Sale of God Photos, Idols and other decorative items etc.,
A) Donations or Gifts from Devotees: As per Section 2(31) of the CGST Act,2017” Consideration in relation to the supply of goods or services or both includes any payment made or to be made , whether in money or otherwise, in respect of, in response to or for the inducement of , the supply of goods or services or both, whether by the recipient or by any other person”. So, the temple has received any donations form the devotees in HUNDI or GIFTS are spiritual in nature. The devotees will not expect anything in return form it. So, the said income can’t be made taxable under GST as there is no “Supply”.
B) Income from Pooja Activities by priests in temple: If a person is conducting or performing “POOJA” in Temple, the Temple will charge some amount by way of ticket. Such amount can’t be considered as a donation, as the service is being provided in respect of the amount charge. So, it will form part of supply. Whether the GST has to be liable to pay in respect of such supply. In this regard, any servicers provided by way of advancement of “RELIGION” is EXEMPT from the GST.
C) Renting of Premises: Generally, the management of temples provided premises like, accommodation by way of rooms, function halls to perform marriage, Upanayam etc., to the pilgrims. Whether such services are liable to charge GST? In this regard, as per Entry No.13 of Notification No.12/2017 – CT (Rate) dt.28.6.2017, states that “ Services by a person (Trust of Temple) by way of:
(a) Conduct of any Religion Ceremony,
(b) Renting of Premises of a sector of a Religious Place meant for general public, owned or managed by an entity registered as a Charitable Trust under Sec.12AA of the Income Tax Act,1961 ( hereinafter referred to as the Income Tax Act,1962) or a trust or institution registered under sub-cause (v) of clause (23C ) of Section 10 of the Income Tax Act,1961 or a body or an authority covered under clause (23BBA) of Section 10 of the said Income Tax Act,1962.
Provided that nothing contained in Entry (b) of this exemption shall apply to,
(i) Renting of Rooms: Renting of Shops I the premises of the Temple: Renting of rooms where charges are Rs.1,000/- (in words Rupees one thousand ) only per day, Otherwise the same would be taxable under GST Law,2017.
(ii) Renting of Open space or Community Halls: Renting of premises like Community halls, Kalyanamandapam or Open area and the like where charges are Rs.10,000/- (in words Ten Thousand) or more per day,
(iii) Renting of Premises for Shop in the temple premises: Renting of premises for Shops or other spaces for business or Commerce purchases. The Temples are collecting rent for utilizing the space of the Temple. Such charges are less than Rs.10,000/- (in words Rupees Ten Thousand) or more per month would be exempted as per Entry No13 of Notification No. 02/2017-CT(Rate) dt.28.6.2017. Otherwise the same would be taxable under GST Law,2017.
(iv) Sale of Books: The Temples make sale of books like Gita, Mahabharata etc.,. As per Entry No.119 of Notification No. 02/2017-CT(Rate) dt.28.6.2017 Printed books including Braille Books are EXEMPT from GST.
(v) Sale of Prasadam: Prasadam Supplied by a Religious Places like Temples, Mosques, Chures,Gurudwaras and Dargahs etc., is EXEMPT from GST as per Entry No.98 of N.No. 02/2017-CT, Dt.28.6.2017.
(vi) Sale of Gold or Silver God Idols Photos: If a Temple (Trust) makes sales of Gold or Silver Idols and Photos to the Pilgrims it is not exempted from GST, Because, such God idols or Photos are classified as goods under Heading 6802 and taxable @12%.
Conclusion:
Dear colleagues, when we examine the Goods and Services Tax Act implication of all the incomes earned by the Temples, Most of the Incomes (Approximately 90% ) of the incomes are EXEMPT. But to avail benefit of exemption , the trust which manages the Temples has to get itself registered under Section 12AA plus /or Sec.110(23c) of the Income Tax Act,1962. So, registration under Sec.12AA plus /or Sec.110(23c) of the Income Tax Act, 1962 is compulsory to claim benefit of EXEMPTION from GST Tax.
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Disclaimer: The above article is for knowledge purpose only, the author is not responsible for any legal binding. The views are purely personal and the above article is based on today’s GST Law position.
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excellent of your comments on GST