Exemption to a religious trust under GST

[Guest]

Our client is a religious trust registered under Section 12 AA of the Income Tax Act. It owns several residential flats.

Can a residential flat be rented out for commercial purpose (To professionals-CA/Doctors/Lawyers)? If yes, can exemption be claimed under Sl.No 13 of Notification 12/2017 Central Tax (Rate)? If yes, Is exemption available under b(ii) or b(iii) of the said Sl.No?

Thanks

[KASTURI SETHI]

If residential flat is used /rented out for commercial purpose as mentioned by you exemption is not available except threshold exemption limit.

[KASTURI SETHI]

Residential flat can be rented out to doctors, lawyers, CAs etc. but not eligible for exemption available under serial no.b(ii) and b(iii) at serial no.13 of Notification No.12/17-CT(Rate) as amended.

[Ganeshan Kalyani]

Sir, proviso to clause (b) is mentioned as "Provided that nothing contained in entry (b) of this exemption shall apply to" It means the clause which you are referring is excluded from exemption. Means it is taxable.

Also, clause (b) starts as "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....". In this provision renting of residential flat is not covered. So, exemption is not available.

AI Summary

Religious trust can't claim tax exemption when renting residential flats for commercial use under Notification 12/2017. A religious trust registered under Section 12 AA of the Income Tax Act inquired about the possibility of renting its residential flats for commercial purposes, such as to professionals like doctors, lawyers, and chartered accountants, and whether it could claim an exemption under Sl.No 13 of Notification 12/2017 Central Tax (Rate). The responses clarified that if the residential flat is rented out for commercial use, the exemption is not applicable, except for the threshold exemption limit. Additionally, the specific clauses referenced do not cover such rentals, making them taxable under the GST provisions.