Navigating the GST Impacts on Navratri Festival

Navratri, a vibrant and joyous festival celebrated with enthusiasm across India, brings communities together to revel in dance, music, and cultural festivities. Beyond the lively beats of the drums and the colorful costumes, an intricate world of taxation plays a role in Navratri celebrations. This article delves into the impact of GST on Navratri festivals, shedding light on the various services involved, their taxability, and compliance requirements. Navratri not only fosters cultural richness but also significantly contributes to local economies by generating employment opportunities and promoting local businesses.

Different Sources of Income during Navratri Events:

Navratri event organizers primarily rely on ticket sales to generate revenue. Sponsors, whether local businesses or corporations, play a pivotal role in supporting Navratri events by providing financial backing in exchange for branding and advertising opportunities during the festivities. Organizers may rent out booth spaces to vendors selling food, beverages, merchandise, or offering services during the event, creating additional revenue streams. Rental income for Navratri dresses, professional fees paid to singers, and guests, and many Navratri events feature food and beverage stalls. Beyond the above, organizers may explore additional income sources, including merchandise sales, dance workshops, donations, fundraising activities, and advertising and promotions.

GST Registration Requirements for Navratri Event Organizers:

Organizers should evaluate whether they meet the registration requirements under GST laws. Services provided occasionally can classify the organizers as "Casual Taxable Persons." Registration under GST is mandatory for Casual Taxable Persons, regardless of the total revenue generated from the event.

What Does Casual Taxable Person Mean?

The threshold limit for registration is not applicable to Casual Taxable Persons. A Casual Taxable Person cannot opt for the Composition Scheme. A Casual Taxable Person has to obtain temporary registration, which is valid for a maximum period of 90 days in the State from where they seek to supply as a casual taxable person. A Casual Taxable Person is required to make an advance deposit of GST (based on an estimation of tax liability).

Registration Criteria for Others (If Not Casual Taxable Persons):

Businesses with a turnover of Rs. 40 lakhs (for goods) and Rs. 20 lakhs (for services) are required to register for GST and pay taxes on their taxable goods and services. Businesses with a yearly turnover below the specified limit are not required to register for GST but can choose to register for GST voluntarily.

Key Issues once need to take in to the consideration related to GST:

• Exemption Notification:The issuance of tickets with a consideration of less than INR 500 is exempt from GST, as per Notification No. 02/2018 -CT(R) dated 25th Jan 2018.

• Check Reverse Charge Mechanism: Example GST on services provided through sponsorship by any person to a body corporate or partnership firm is payable under the Reverse Charge Mechanism.

• Check Block Credit related to event: Example Input Tax Credit (ITC) of GST paid on gifts procured for free distribution is blocked as per Section 17(5) of the GST Act.

• Once registered under GST, it's essential to identify the services being rendered and determine the applicable GST rates. Here's a breakdown of GST rates for major revenue sources:

1. Sale of tickets - (99962) 18%

2. Sponsorship income - (998397) 18%

3. Income from renting of vendor booths - (997212) 18%

4. Advertisement space sale - (998366) 18%

Navratri festivals, celebrated with great fervor, contribute significantly to the local economy by generating employment opportunities and promoting local businesses. However, event organizers need to be aware of the GST implications on their services, taxability, and compliance requirements. While this article covers key aspects, it's essential to consult with a tax professional to ensure full compliance with the tax laws. Navratri is a time of cultural celebration and joy, and understanding the taxation aspects can help keep the festivities running smoothly.

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