The government has said free food supplied in anna kshetras (food areas) run by religious institutions is exempt from GST. Besides, prasadam distributed by places of worship like temples and gurudwaras would not attract any GST.
Clarifying media reports that suggested GST would be levied on free food supplied in anna kshetras , the finance ministry said in a statement that “this is completely untrue. No GST is applicable on such food supplied free.”
However, some inputs and services required for making prasadam are subject to GST. These include sugar, edible vegetable oil, ghee, butter and transportation of these goods.
The ministry said most of these inputs or input services have multiple uses and under the GST regime, separate tax rates can’t be prescribed depending on the purpose for which sugar is supplied. GST being a multi-stage tax, it is difficult to administer exemptions and concessions based on end-use and no such incentives are envisaged under the new tax regime, the ministry said. “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 institution.”
Source : http://economictimes.indiatimes.com/news/economy/policy/no-gst-on-free-food-supplied-by-religious-institutions/articleshow/59547163.cms