Gst on rent received by educational and charitable trust

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vijay (Querist)
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21 May 2019 Dear Learned Experts,

We are a educational and charitable trust working among persons with disabilities. We would like to give some portion of the immovable property to a garment industry on a rental basis. It would be a great help for us to know the GST implication if we give the immovable property for a commercial purpose.

Looking forward to receiving your guidance in this regard.

CA Anita Bhadra

CA Anita Bhadra (Expert)
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21 May 2019 Renting of shops/premises by charitable Institutions for commercial business purposes is taxable under GST .

In case , total of your income from rent & income from exempted charitable activities exceeds Rs 20 Lakhs , , Your aggregate income will be more than Rs 20 Lakh and you need to take GST registration and have to do all other compliance under the Act

vijay

vijay (Querist)
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21 May 2019 Thank you so much, CA Anita, and appreciate your quick response. I would like to furnish some additional information about our trust. The trust has a business unit which is incidental to the objects of the trust and maintains separate books of account under the Income Tax Act apart from the charitable activities. We are also registered under GST as we export our handicraft products. The annual income from the business unit is about less than 10 lakhs and the proposed rent would be around Rs.15,000 per month (Rs.1,80,000 p.a)
Services by a person by way of renting of precincts of a religious place meant for general public-owned or managed by an entity registered as a charitable or religious trust under section 12AA of the Income-tax Act, 1961

Provided that nothing contained in (b) of this exemption shall apply to,-
(i) renting of rooms where charges are Rs 1000/- or more per day;
(ii) renting of premises, community halls, kalyanmandapam or open area, etc where charges are Rs10,000/- or more per day;
(iii) renting of shops or other spaces for business or commerce where charges are Rs 10,000/-or more per month

I am confused with the above three clauses. Do we fall under the 3rd option where we are giving our property for business and the rent charges are more than 10000/- or does it apply only for the religious places given for business purpose? We are not a religious trust.

Please guide me.

CA Anita Bhadra

CA Anita Bhadra (Expert)
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21 May 2019 Services by a person by way of renting of precincts of a religious place meant for general public-owned or managed by an entity registered as a charitable or religious trust under section 12AA of the Income-tax Act, 1961

Above exemption is available if rented space for business is within the precincts of a religious place meant for general public owned by a charitable trust

CA Anita Bhadra

CA Anita Bhadra (Expert)
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21 May 2019 Dictionary meaning of ‘precincts’ is an area within the walls of perceived boundaries of a particular building or place, an enclosed or clearly defined area of ground around cathedral, church, temple, college, etc

Religious place’ means a place which is primarily meant for conduct of prayers or worship pertaining to a religion, meditation or spirituality. [Clause (zy)]

General public’ means the body of people at large sufficiently defined by some common quality of public or impersonal nature. [

Entry No. 13 of Notification No. 12/2017-Central Tax (Rate), dated 28th June, 2017 [Clause (b)].

vijay

vijay (Querist)
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21 May 2019 The premises given for rent is within our building premises but it is no a religious place. the clause is mentioned about the Services by a person by way of renting of precincts of a religious place. I am very much confused about this. In your opinion does our trust which is not a religious fall under the option or this whole section is not applicable for non religious trust.

CA Anita Bhadra

CA Anita Bhadra (Expert)
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21 May 2019 In my opinion , since it is clearly mention in the exemption notification ( and also clarified by CBEC in flyer ) Exemption is applicable only for services by way of renting PRECINCTS of a RELIGIOUS place

vijay

vijay (Querist)
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21 May 2019 Since we are not a religious trust and the property rented is not a religious place it does not apply for us. what are the implication for a charitable trust when the property is rented for business purpose.

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