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The government will reimburse Goods and Services Tax (GST) paid on specific items procured by charitable and religious institutions for distributing free food to public.
Towards this, the Centre will spend as much as Rs 325 crore in two financial years starting 2018-19, on a scheme of financial assistance under ‘Sewa Bhoj Yojna’, the Ministry of Culture said today.
Detailed guidelines regarding the implementation of the scheme will be issued separately, the ministry said.
While free food supplied at community kitchens run by religious bodies is exempted from GST, most inputs including desi ghee, sugar or vegetables attract tax.
Since the food items served do not fall under the ambit of GST, none of the bodies could claim tax credit, which increased financial burden on them.
Under the scheme, charitable bodies will get a refund of CGST or Centre’s share of GST and the Centre’s share of Integrated GST — tax on inter-state supplies — on certain items used to prepare free food for public.
The decision will benefit the gurudwaras, as they now claim tax credit on raw materials used to prepare ‘langar sewa’.
According to reports, Shiromani Gurdwara Parbandhak Committee (SGPC), Amritsar, has paid GST amounting to Rs 2 crore from July 1, 2017 to January 31, 2018 on purchase of different items required to prepare langar at the Golden Temple.
Purchase costs for Golden Temple's kitchen, which feeds close to 60,000 devotees daily, comes to around Rs 75 crore annually.
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