Indian Temples Under Tax: Decoding Their Wealth and GST Fate

A Deep Dive into Temple Finances

Indian temples, beyond their spiritual importance, function as significant financial entities. They amass considerable wealth through diverse means, including voluntary contributions, ceremonial offerings, and commercial ventures. This financial scale has sparked pertinent inquiries concerning their tax obligations, notably the Goods and Services Tax (GST). The interplay between religious institutions and taxation is a matter of complexity. It necessitates a clear delineation between devotional gifts and revenue derived from business activities. This article aims to explore the financial terrain of Indian temples, analyzing their earnings and the application of GST regulations.   

Understanding Temple Earnings and GST Implications

Across India, temples generate substantial fiscal intake. This income originates from a range of sources. These encompass freely given donations, the provision of religious services, and various for-profit operations. A fundamental question emerges: Are temples subject to GST? The response, however, requires careful consideration. It turns on the character of the income. A critical distinction must be drawn between religious donations and revenue from taxable commercial activities.

What is GST?

The Goods and Services Tax  (GST) represents an indirect tax levied in India on the supply of goods and services. It is designed as a comprehensive, multi-stage, and destination-based tax.   

• Comprehensive: It consolidates numerous prior indirect taxes, such as excise duty, service tax, and VAT.   
• Multi-stage: Tax is applied at each phase of production and distribution, with credits given for taxes paid at earlier stages.   
• Destination-based: Tax is levied where goods or services are consumed, rather than where they are produced.   

GST seeks to simplify the tax framework and establish a unified national market. It is structured into various tax brackets, with rates varying according to the type of goods or services. This system is intended to ensure transparent commercial transactions and efficient tax revenue collection.   

How Much Do Indian Temples Earn?

The financial disclosures of Indian temples exhibit considerable variance. Nonetheless, estimates indicate that the nation's major temple trusts accumulate substantial sums annually. Consider the following examples:

• Tirumala Tirupati Devasthanam (TTD): This temple is projected to obtain ₹4,800 crore in FY25. Its primary income stems from donations, sales of Prasad, and property rentals.
• Vaishno Devi Trust: This trust garnered ₹683 crore in FY24. Its income sources include donations, revenue from helicopter services, and sales from on-site shops.
• Sree Padmanabhaswamy Temple: Based on 2014 estimates, this temple earned ₹700 crore. Its income is generated from offerings, rental earnings, and interest on its significant financial holdings.   

When is GST Levied on Temples?

Contrary to widespread social media assumptions, GST does not pertain to donations or religious rites. The tax is exclusively levied on commercial endeavors undertaken by temple trusts. It is essential to grasp the distinction.

GST-Exempt Activities

• Donations & Offerings: Voluntary contributions remain fully tax-exempt.
• Prasad & Rituals: The sale of Prasad and fees for pujas or darshan are excluded from GST.
• Charitable Services: Free meal provisions and other charitable efforts are not subject to taxation.

GST-Applied Activities

• Renting rooms (charges exceeding ₹1,000): A 12% GST rate applies.
• Renting community halls (over ₹10,000): An 18% GST rate is applied.
• Commercial Shops (monthly rent > ₹10,000): An 18% GST rate is applicable.
• Souvenir Shops, Sales & Merchandise: GST rates span from 12% to 18%.
• Paid Helicopter Services (Vaishno Devi): An 18% GST rate is implemented.

How Much GST Do Temples Pay?

The GST liabilities of temples vary based on the extent of their commercial activities. For instance:

• Tirumala Tirupati Devasthanam (TTD): This temple paid ₹130 crore in GST between FY21 and FY25.
• Vaishno Devi Trust: In FY24, this trust obtained ₹129.6 crore from sales and ₹84 crore from rentals, both subject to GST.
• Sree Padmanabhaswamy Temple: This temple received a ₹1.57 crore GST notice for a seven-year duration.

Legal Insights & Case Laws

• Sree Padmanabhaswamy Temple Case (2024):
  • A tax notice of ₹1.57 crore was issued for GST arrears from 2017.
  • The temple trust challenged the notice, arguing that their services were mainly religious.
  • The tax department clarified that commercial rentals and sales were indeed taxable.   
• Tirupati Temple Trust's Legal Compliance:
  • TTD, overseeing ₹4,800 crore in annual revenue, proactively pays GST on its taxable actions.
  • Their transparency has avoided legal disputes.
• Supreme Court Ruling on GST & Religious Institutions:
  • In 2023, the Supreme Court determined that religious donations and spiritual services cannot be taxed.   
  • This decision solidified GST exemptions for core religious activities.

Tamil Nadu Government Stand

The Tamil Nadu government, through its political channels, has voiced strong disapproval of the GST imposition on temples managed by the Hindu Religious and Charitable Endowments (HR&CE) department. Key aspects of their stance encompass:

• Condemnation of the central government's decision, pointing out that temples were previously exempt due to their religious and service functions.
• Highlighting the fiscal burden imposed on temples, notably those with high income, now required to pay GST, including back taxes and penalties.
• arguing that activities such as prasad sales, and darshan fees should be considered service oriented, and thus be exempt.
• the government feels there is unfair taxation placed onto religious institutions.

This position displays a broader concern regarding GST's impact on religious entities and the perceived erosion of their traditional exemptions.

Conclusion 

While religious donations and spiritual services remain exempt, commercially active temples must follow tax law. Understanding these points are important to ensure correct information, and financial transparency for the temples. Current disputes regarding GST, seen in the Tamil Nadu government's criticism of the federal government, show this is a sensitive topic. Data provided shows that main temples pay fairly low percentages of total income to GST, further validating that the tax is on business procedures, and not spirituality. It is imperative that temples keep accurate financial logs, and follow all applicable tax rules, for continued operations without undue problems.