GST impact on free food service by religious institutions: Government says no impost on service

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New Delhi | July 12, 2017 5:40 PM

Anna kshetras - food areas - run by religious institutions providing free food service will not attract goods and services tax (GST), the Ministry of Finance has said.

GST, religious institutions, Ministry of Finance, FOOD“No GST is applicable on such food supplied free,” the statement from the ministry said. (PTI)

GST impact on free food service by religious institutions: Anna kshetras – food areas – run by religious institutions providing free food service will not attract goods and services tax (GST), the Ministry of Finance has said, according to PTI. “No GST is applicable on such food supplied free,” the statement from the ministry said while terming as “completely untrue,” media reports which suggested that GST applies on free food supplied by religious institutions.

“Further, prasadam supplied by religious places like temples, mosques, churches, gurudwaras, dargahs, etc. attracts Nil CGST and SGST or IGST, as the case may be,” the statement further added. The government further clarified that some of the inputs and input services required for making prasadam would be subject to GST. These include sugar, vegetable edible oils, ghee, butter, service for transportation of these goods etc. as these inputs and input services items have multiple uses, a PTI report said.

“GST being a multi-stage tax, end-use based exemptions or concessions are difficult to administer,” the ministry said, adding “Therefore, GST does not envisage end-use based exemptions. It would, therefore, not be desirable to provide end-use based exemption for inputs or input services for making prasadam or food for free distribution by religious institutions.” GST has been rolled out in the country from July 1.

Revenue secretary Hasmukh Adhia had earlier said restaurants, hotels and eateries should cut rates on food items in their menu to reflect the benefit of being able to set off tax paid on inputs under goods and services tax (GST), according to PTI.

While the value of alcohol or alcohol products consumed will attract value added tax (VAT), he said, GST will be levied on entire sum of food bill, including service charge, in a restaurant. Earlier, restaurants used to levy a service tax on the bill. But the tax paid by the hotel or restaurant operators on inputs could not be set off against the tax on the final bill. This facility, called input tax credit (ITC), is available in the GST regime, the report added.

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