GST PROVISIONS RELATING TO CHARITABLE TRUSTS/NGO’s
For Seminar at ICAI Bhavan ,Pune on 21/1/2018
Compiled by CA. Suhas K. Malankar
PART - A - GENERAL PROVISIONS - APPLICABLE TO ALL
“Person “defined As per Sec 2(84) “person” includes—
(a) An individual;
(b) a Hindu Undivided Family;
(c) a company;
(d) a firm;
(e) a Limited Liability Partnership;
(f) an association of persons or a body of individuals, whether incorporated
or not, in India or outside India;
(g) any corporation established by or under any Central Act, State Act or
Provincial Act or a Government company as defined in clause (45) of
section 2 of the Companies Act, 2013;
(h) anybody corporate incorporated by or under the laws of acountry outside India;
(i) a co-operative society registered under any law relating to co-operative societies;
(j) a local authority;
(k) Central Government or a State Government;
(l) society as defined under the Societies Registration Act,1860;
(m) trust; and
(n) every artificial juridical person, not falling within any of the above
This definition is to be read along with the fiction in Section 2(107) where
a ‘taxable person’ is understood to be sub-units of a person such that
transactions between two taxable persons is also a taxable supply. Every
‘person’ is understood to have a separate identity, under the GST law.
“Business” defined as per Sec 2(17) “business” includes––
(a) any trade, commerce, manufacture, profession, vocation, adventure, wager or
any other similar activity, whether or not it is for a pecuniary benefit;
(b) any activity or transaction in connection with or incidental or ancillary to sub-clause (a);
(c) any activity or transaction in the nature of sub-clause (a), whether or not
there is volume, frequency, continuity or regularity of such transaction;
(d) supply or acquisition of goods including capital goods and services
in connection with commencement or closure of business;
(e) provision by a club, association, society, or any such body (for a subscription
or any other consideration) of the facilities or benefits to its members;
(f) admission, for a consideration, of persons to any premises;
(g) services supplied by a person as the holder of an office which has been
accepted by him in the course or furtherance of his trade, profession or
vocation;
(h) services provided by a race club by way of totalisator or a licence to book
maker in such club; and
(i) any activity or transaction undertaken by the Central Government, a State
Government or any local authority in which they are engaged as public
authorities; [ CGST ACT]
Term ‘business’ was not defined under Excise / Service tax laws however, it is
defined under the CST Act / State VAT laws. The definition in the GST law is a
modified version of the definition under CST / VAT laws, but the scope is
substantially expanded to include among others wager, profession and
vocation. This definition is very wide and covers all the transactions that are
currently subjected to various taxes that are subsumed in the GST Laws.
Sec 7. Scope of supply
(1) For the purposes of this Act, the expression “supply” includes––
(a) all forms of supply of goods or services or both such as sale, transfer, barter,
exchange, licence, rental, lease or disposal made or agreed to be made for a
consideration by a person in the course or furtherance of business;
(b) import of services for a consideration whether or not in the course or furtherance
of business;
(c) the activities specified in Schedule I, made or agreed to be made without a
consideration; and
(d) the activities to be treated as supply of goods or supply of services as referred to
in Schedule II.
(2) Notwithstanding anything contained in sub-section (1), ––
(a) Activities or transactions specified in Schedule III; or
(b) such activities or transactions undertaken by the Central Government, a State
Government or any local authority in which they are engaged as public authorities,
as may be notified by the Government on the recommendations of the Council, shall
be treated neither as a supply of goods nor a supply of services.
(3) Subject to the provisions of sub-sections (1) and (2), the Government may, on the
recommendations of the Council, specify, by notification, the transactions that are to
be treated as—
(a) a supply of goods and not as a supply of services; or
(b) a supply of services and not as a supply of goods. [CGST Act]
Supply:
a) Generic meaning of ‘supply’: Supply includes all forms of supply
(goods and / or services) and includes agreeing to supply when
they are for a consideration and in the course or furtherance of
business (as defined under Section 7 of the Act). It specifically
includes:
(i) Sale
(ii) Transfer
(iii) Barter
(iv) Exchange
(v) License
(vi) Rental
(vii) Lease
(viii) Disposal
The word ‘supply’ is all-encompassing, subject to exceptions carved out in the relevant provisions. E.g.: Supplies mentioned in Schedule III of the Act are not treated as supply
Under this clause, it is essential that all the above forms of transactions
including the extended and generic meaning given to ‘supply’ should be
made for a ‘consideration’. Only exception for this will be cases specified
in Schedule I.
Absence of consideration ( consideration as defined in Section2(31))will
take away the character of ‘ supply ‘under this clause.
(b) Supply should be in the course or furtherance of business:
For a transaction to qualify as ‘supply’, it is essential that the same is ‘in the
course or furtherance of business’.
Supplies which are not in the course of business (or in furtherance of business)
will not qualify as ‘supply’ for the levy of tax, except in case of import of service
for consideration, where the service is a supply whether or not it is made in the
course or furtherance of business.
Such supply may or may not be for a pecuniary benefit .
For deciding whether it is supply or not frequency / regularity of transaction or
activities is not relevant.
(c) Import of service will be taxable in the hands of the recipient (importer):
The word ‘supply’ includes import of a service, made for a consideration and
whether or not in the course or furtherance of business. This implies that
import of services even for personal consumption would qualify as ‘supply’
and therefore would be liable to tax. This would not be subject to the threshold
limit as tax is expected to be payable on reverse charge basis, and the threshold
limits do not apply in case of supplies attracting tax on reverse charge basis.
Note: Import of services is included within the meaning of ‘supply’ under the CGST /
SGST Acts. However, it would be liable to IGST since it would not be an intra-State
supply. In fact, Section 2(21) of IGST Act has adopted the meaning of ‘supply’ from
CGST/SGSTAct.
(d) Transactions without consideration: The law provides that in certain
cases, even though there is no consideration, the same would be treated as
‘supply’. Such cases are listed in Schedule I.
(i) Permanent transfer of business assets where input tax credit has been
availed:
Typically, donation of business assets or scrapping or disposal in any
other manner (other than as a sale – i.e., for a consideration) would
qualify as ‘supply’ under this clause, where input tax credit has been
claimed on the same.
The law requires that such transactions should be treated as supply only
when any input tax has been availed on the business assets. For instance,
in case of cars purchased by the company for use by directors would not
qualify for input tax credit and such input tax credit would therefore, not
have been claimed. Say, after a few years, the same car is transferred to
such director on a free of cost basis - this would not be treated as a supply
for Schedule I as no input tax credit was availed on such car.
(ii) Supply of goods and / or services between related person, or between
distinct persons as specified in Section 25(4) or 25(5), when made in the
course or furtherance of business: Any supply of goods and / or services
in the course of business or furtherance of business by a taxable person to
a related person (related person as defined by way of explanation below
Section15, or by one taxable person to another taxable person (as
Provided in Section 25 of the Act), when made without consideration,
would qualify as ‘supply’.
E.g.; Free supplies to related persons, stock transfers to a unit outside the
State/ a different business vertical, etc. will be reckoned as supplies.
(iii) Supply of goods by a principal to his agent, where the agent
undertakes to supply such goods on behalf of the principal: E.g. A
company is located in the suburbs and employs an agent in the city to
undertake sales on behalf of the company. Goods transferred by the
company to the premises of the agent in the city would be qualify as
a‘supply’.
(iv) Supply of goods by an agent to his principal, where the agent
undertakes to receive such goods on behalf of the principal: E.g. A
company is located in the suburbs and employs an agent in the small
town nearby to undertake purchases on behalf of the company. Goods
procured and transferred by the agent to the company would qualify as a
‘supply’.
(v) Import of services by a taxable person from a related person, or
from any of his other establishments outside India, in the course or
furtherance of business:
(e) Certain supplies will be neither a supply of goods, nor a supply
of services: The law lists down matters which shall not be considered
as ‘supply’ for GST. This list includes:
• Activities/ transactions in Schedule III:
(i) Services by an employee to an employer in the course or in relation
to his employment;
(ii) Services by any Court or Tribunal established under any law for
the time being inforce;
(iii) Functions performed by MPs, MLAs, etc.; the duties performed by
a person who holds any post in pursuance of the provisions of the
Constitution in that capacity; the duties performed by specified
persons in a body established by the Central State Government or
local authority, not deemed as an employee;
(iv) Sale of land and Sale of Building (except sale of under-construction
premises where the part or full consideration is received before
issuance of completion certificate or before its first occupation,
whichever is earlier.;
(v) Actionable claims, other than lottery, betting and gambling and
(vi) Services of funeral, burial, crematorium or mortuary including
transportation of the deceased.
• An employer and employee are treated as “related persons” and
hence any supply of goods or services by employer to employee
without consideration would be considered as supply as per
schedule I. However, gifts not exceeding Rs. 50,000 in value in a
financial year by an employer to employee shall not be treated as
supply of goods or services or both.
(f) To be notified: The Central Government or the State Government
may notify such other transactions to either qualify as ‘supply of
goods’ or as ‘supply of services’ This notification must be issued
only upon recommendations from the Council.
“Taxable Supply” defined:
(108) “taxable supply” means a supply of goods or services or both which is
leviable to tax under thisAct;
For a transaction to qualify as a taxable supply, the following components are compulsory:
1. The transaction must involve either goods or services, or both of them;
2. Such goods or services should not be specified under Schedule III
(neither a supply of goods nor a supply of services);
3. The transaction should fall within the meaning of ‘supply’ in terms
of Section 7 of the CGSTAct;
4. The supply should be leviable to GST – i.e., it should not be
covered within the meaning of ‘non-taxable supply’ as defined
under Section 2(78) – i.e., alcoholic liquor for human consumption.
This implies that supplies enjoying a full exemption from tax by
way of an exemption notification would also be treated as taxable
supplies.
“Exempt Supply” defined –
As per Sec 2(47) “exempt supply” means supply of any goods or services or
both which attracts nil rate of tax or which may be wholly exempt from tax
under section 11, or under section 6 of the Integrated Goods and Services Tax
Act, and includes non-taxable supply; [ CGST ACT]
The following aspects need to be noted:
1. Zero-rated supplies such as exports or to SEZ unit/developer
would not be treated as supplies taxable at ‘NIL’ rate of tax;
2. Input tax credit attributable to exempt supplies will not be
available for utilisation/ set- off.
“Non-taxable supply” defined:
As per Sec 2(78) “non-taxable supply” means a supply of goods or
services or both which is not leviable to tax under this Act or under the
Integrated Goods and Services Tax Act; [CGST ACT]
A transaction must be a ‘supply’ as defined under the GST law, to
qualify as a non-taxable supply under the GST law.
Following shall not be treated as non –taxable supplies:
1. Stock transfers to unit within the State for which no separate
registration is obtained, which does not qualify as a ‘supply’ as
defined under Section 7 of the CGST Act, cannot be said to be a
non-taxable supply.
2. Transactions specified in Schedule III which are treated as neither
a supply of goods nor a supply of services, would also not qualify
as non-taxable supplies.
3. Zero rated – Nil Rated supplies- Supplies that enjoy the benefit of
being wholly exempted from taxes, nil-rated supplies and zero-
rated supplies are also not covered under the umbrella of ‘non-
taxable supplies’ given that the goods or services are in fact liable
to tax, and such tax is exempted by virtue of an exemption
notification, or the tax rate is nil.
What is covered in non-taxable supplies-
Only those supplies that are excluded from the scope of taxation under
GST are covered by this definition – i.e., alcoholic liquor for human
consumption.
.“Place of Business” defined
As per sec. (85) “place of business” includes––
(a) a place from where the business is ordinarily carried on, and includes a
warehouse, a godown or any other place where a taxable person stores
his goods, supplies or receives goods or services or both ;or
(b) a place where a taxable person maintains his books of account; or
(c) a place where a taxable person is engaged in business through an agent,
by whatever name called; [CGST]
Registration Under GST Law qua place of Business:
Every ‘supplier’ shall be liable to be registered under the GST law in the
State (or Union territory) from where he makes any taxable supply of
goods or services or both, if his aggregate turnover in a financial year
exceeds the specified limit (Rs.20Lacs orRs.10Lacs refer Section 22 for
details). [sec 22 CGST]
The following persons (amongst others) are also compulsorily required to
obtain registration, as per sec 24 of CGST whether or not their turnover
exceeds the threshold limit:
1. Non-resident taxable persons, casual taxable persons making any taxable supply
2. Persons making any inter-State taxable supply;
3. Recipients of supplies of goods or services that are notified
for tax on reverse charge basis;
4. Persons such as agents who make taxable supplies on behalf of other taxable persons;
5. Electronic commerce operator and persons effecting supplies through them;
6. Person supplying OIADAR services from a place outside
India to an unregistered person in India.
Threshold limit to obtain registration under the Act: 20 Lakhs (or 10 Lakhs in case
of supplies effected from Special Category States, in a financial year.
“Aggregate Turnover” defined as per Sec 2(6) “aggregate turnover” means the
aggregate value of all taxable supplies (excluding the value of inward supplies on
which tax is payable by a person on reverse charge basis), exempt supplies,
exports of goods or services or both and inter-State supplies of persons having the
same Permanent Account Number (PAN) , to be computed on all India basis but
excludes central tax, State tax, Union territory tax, integrated tax and cess; [ CGST
ACT]
Aggregate Turnover is an all-encompassing term covering all the supplies effected
by a person having the same PAN. It specifically excludes:
1. Inward supplies effected by a person which are liable to tax under reverse
charge mechanism
2. Various taxes under the GST law, Compensation cess.
The different kinds of supplies covered are:
a) Taxable supplies;
b) Exempt Supplies:
• supplies that have a ‘NIL’ rate of tax;
• supplies that are wholly exempted from UTGST, CGST or IGST; and
• supplies that are not taxable under the Act (alcoholic liquor
for human consumption);
c) Export of goods or services or both, including zero-rated
supplies
d) Inter-State supplies between units of a person with the same
PAN will also form part of aggregate turnover
PART-B- SPECIFIC EXEMPTIONS FOR CHARITABLE , RELIGIOUS ACTIVITIES
Notification 12/2017 Central Tax – dt. 28/6/2017
Following services are exempt from tax-
Sr. No. 1 Service by an entity registered under section 12 AA of the Income Tax Act by way of Charitable Activities -
Meaning of Charitable Activities - as per definition given in the said notification
(i) Public health by way of –
(A) Care or counselling of –
(I) Terminally ill persons or persons with severe physical/
mental disability
(II) Persons afflicted with HIV/AIDS
(III) Person addicted to narcotics, drugs, alcohol etc.
(B) Public awareness of preventive health, family planning or
prevention of HIV infection
(ii) Advancement of religion, spirituality or yoga
(iii) Advancement of educational programmes or skill development
relating to –
(A) Abandoned, orphaned or homeless children
(B) Physically or mentally abused and traumatized person
(C) Prisoners
(D) Person over age of 65 years residing in rural area
(iv) Preservation of environment including watershed, forests and wildlife
Sr. No 13 Services by a person by way of –
(a) Conduct of religious ceremony
(b) Renting of precincts of a religious place meant for general public owned
and managed by an entity registered-
as Charitable / Religious Trust u/s 12AA of the Income Tax Act
or Trust / Institute registered u/s 10(23C) Sub clause (v)
or body / authority covered u/s 10 (23BBA)
Above exemption not available if –
(i) Renting of rooms – room charges are Rs. 1000/- or more per day
(ii) Renting of hall, Kalyan mandapam, open area etc – charges per
day are Rs.10000/- or more
(iii) Renting of Shops / space for business – charges are Rs. 10000 or
more per month
Sr. no 50 Service by public libraries - lending of books, publications, knowledge
enhancing content or material
General exemption for educational institutions....
Sr. no 66 Service provided
(a) By an educational institution to its students, faculty, staff
(b) To an educational institution by way of
(i) Transportation of students, faculty, staff
(ii) Catering including midday meal scheme sponsored by govt.
(iii) Security, cleaning or house keeping
(iv) Service relating to –Admission or Conduct of exam. (upto HSC)
Benefit under clause (b) above is available to educational institution
providing services by way of pre-school education and school education
upto HSC (or equivalent) only .
2(y)” educational institution” means an institution providing services by way of,-
(i) pre-school education and education up to higher secondary school or equivalent;
(ii) education as a part of a curriculum for obtaining a qualification
recognised by any law for the time being in force;
(iii) education as a part of an approved vocational education course;
2(h) “approved vocational education course” means, -
(i) a course run by an industrial training institute or an industrial training
centre affiliated to the National Council for Vocational Training or State
Council for Vocational Training offering courses in designated trades
notified under the Apprentices Act, 1961 (52 of 1961); or
(ii) a Modular Employable Skill Course, approved by the National
Council of Vocational Training, run by a person registered with the
Directorate General of Training, Ministry of Skill Development and
Entrepreneurship;
General exemption for Medical Services
Sr. no 74 Services by way of
(a) Health care service by a clinical establishment, an authorized medical
practitioner or para medics
(b) Services provided by way of transportation of patient in an ambulance – if
not covered in (a)
2(s) Clinical establishment means --
a hospital, nursing home , clinic, sanatorium or any other institution , by
whatever name called, that offers services or facilities requiring diagnosis
or treatment for care for illness, injury, deformity, abnormality or
pregnancy in any recognized system of medicine in India, or a place
established as an independent entity or a part of an establishment to carry
out diagnostic / investigative services of diseases
2(zg) Health care services means
Diagnostic / treatment
Transportation of patient
Does not include – hair transplant
Cosmetic surgery / plastic surgery ( exception when undertaken to cure congenital defects, developmental abnormality, injury , trauma.)
2(k) “authorised medical practitioner” means a medical practitioner registered
with any of the councils of the recognised system of medicines established or
recognised by law in India and includes a medical professional having the
requisite qualification to practice in any recognised system of medicines in India
as per any law for the time being in force;
Sr.No.76 Public Conveniences
Services by way of public conveniences such as provision of facilities of bathroom, washrooms, lavatories, urinal or toilets.
Sr.No.80 training or coaching in recreational activities
Services by way of training or coaching in recreational activities relating to-
(a) arts or culture, or
(b) sports by charitable entities registered under section 12AA of the
Income-tax Act.
Sr.No.81 Right to admission
Services by way of right to admission to-
(a) circus, dance, or theatrical performance including drama or
ballet;
(b) award function, concert, pageant,musical performance or any sporting event other than a recognised sporting event;
(c) recognised sporting event,
where the consideration for admission is not more than Rs 250 per person as
referred to in (a), (b) and (c) above.
-Thank You -
GST GST
and R
The provisions relating to taxation of activitieinstitutions and religious trusts have been borroover from the erstwhile service tax provisions. Allby such entities are not exempt. In fact, there arthat are provided by such entities which would beof GST.
Notification No.12/2017-Central Tax (Rate) datedexempts services provided by entity registered unof the Income-tax Act, 1961 by way of charitablwhole of GST vide entry No. 1 of the notificationthat “services by an entity registered under
Income-tax Act, 1961 by way of charitable activit
from whole of the GST. Thus as per this notificatigiven to the charitable trusts, only if the followinsatisfied.
(a) Entities must be registered under Section 12A
tax Act, and
(b) Such services or activities by the entity are by
activities.
Thus, it is essential that the activities must conf“charitable activities’ which has been defined in under “charitable activities” means activities rela
(i) public health by way of:
(A) care or counseling of
(I) terminally ill persons or persons with
mental disability;
(II) persons afflicted with HIV or AIDS;
(III) persons addicted to a dependence-for
such as narcotics drugs or alcohol; or
Prepared by: Nat
Director
CENTR
www.cb
(GOODS AND SER
ST on Charitable
nd Religious Trus
ivities of charitable rrowed and carried
All services provided e are many services be within the ambit
ted 28th June 2017 under Section 12AA
table activities from tion, which specifies
Section 12AA of tivities” are exempt cation, exemption is wing conditions are
2AA of the Income-
by way of charitable
onform to the term the notification as
relating to:
severe physical or
forming substance or
(B) public awareness of preventprevention of HIV infection;
(ii) advancement of religion, spiri
(iii) advancement of educational p
relating to:
(A) abandoned, orphaned or h
(B) physically or mentally abu
(C) prisoners; or
(D) persons over the age of 65
(iv) preservation of environment in
wildlife.
National Academy of Customs, Indirect Taxes & Narcot
irectorate General of Taxpayer S
ENTRAL BOARD OF EXCISE &
ww.cbec.gov.in
D SERVICES TAX)
ble
rusts
entive health, family planning or on;
pirituality or yoga;
al programmes or skill development
or homeless children;
abused and traumatized persons;
65 years residing in a rural area;
nt including watershed, forests and
rcotics
yer Services
ISE & CUSTOMS
GSTGST on Charitable
and Religious Trusts
This notification makes the exemption to charitablefor charitable activities more specific. While the income from only those activities listed above is exempt from GST, income from the activities other than those mentioned above is taxable.could be many services provided by charitable and religiowhich are not considered as charitable activities and hence, such services come under the GST net. The indicative listcould be renting of premises by such entities, grantand advertising rights during conduct of events/functions
This is also borne out from the fact that in so far as renting outof religious precincts is concerned, there is a limited exemption available to such entities. Activities not covered by the specific exemption would be taxable. Entry No.13 of notificationCentral Tax (Rate) dated 28th June, 2017, provides the following exemption to entities registered under Section 12AATax Act:
Services by a person by way of:
(a) conduct of any religious ceremony;
(b) renting of precincts of a religious place meant
owned or managed by an entity registered as a charitable or religious trust under section 12AA of the Income(hereinafter referred to as the Income-tax Act) or a trust oran institution registered under sub clause (v) of clause (23C) of section 10 of the Income-tax Act or a body or an authority covered under clause (23BBA) of section 10 oftax Act:
Provided that nothing contained in entry (b) shall apply to:
(i) renting of rooms where charges are one thousand
or more per day;
(ii) renting of premises, community halls, kalyanmandapam
or open area, and the like where charges are tenrupees or more per day;
Prepared by: National Academy of Customs, Indirect Taxes & Narcotics
Directorate General of Taxpayer Services
CENTRAL BOARD OF EXCISE & CUSTOMS
www.cbec.gov.in
GST (GOODS AND SERVICESGST on Charitable
and Religious Trusts
charitable trusts available charitable activities more specific. While the income from only
those activities listed above is exempt from GST, income from the taxable. Thus, there
could be many services provided by charitable and religious trust which are not considered as charitable activities and hence, such
list of such services grant of sponsorship
events/functions etc.
This is also borne out from the fact that in so far as renting out of religious precincts is concerned, there is a limited exemption available to such entities. Activities not covered by the specific
notification no.12/2017- (Rate) dated 28th June, 2017, provides the following
12AA of the Income
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
tax Act) or a trust or n registered under sub clause (v) of clause (23C)
tax Act or a body or an authority of the said Income-
of this exemption
renting of rooms where charges are one thousand rupees
renting of premises, community halls, kalyanmandapam or open area, and the like where charges are ten thousand
(iii) renting of shops or other where charges are ten thousand rupees or more per month.
Thus, the law gives a limited exemption to renting of only religious precincts or a religious place meant for general public by the entity registered under Section 12AA of the Income (zc) of the said notification, the term “general pbody of people at large sufficientlyof public or impersonal nature”.
The term “religious place” as per the clause (zy) of the said notification means “a place which is primarily meant for conductof prayers or worship pertaining to a religion, meditation, or spirituality”. Dictionary meaning of “precincts” is an area within the walls or perceived boundaries of a particular building or place, an enclosed or clearly defined area of ground around a cathechurch, temple, college, etc. This implies that if immovable propertieslike marriage hall, convention hall, rest house for pilgrims, shops situated within the premises of a religious place are rented out, income from letting out of such propertyBut if such properties are not situated in the precincts of a religious place meaning thereby not within walls or boundary walls of the religious place, income from suchand income from it will be liable to
Income from a religious ceremony organised by a charitable trust is exempt as per the above notification. So the income from Navratri functions,other religious functions, and religious poojas conducted on special occasions like religiousfor this purpose by the charitableGST.
But a careful perusal of this exemption shows that all income from such a religious ceremony is not exempt way of conduct of religious ceremony are not exempt). Therefore, the nature of income is an essential factor for ascertaining whether it will be taxable or exempt. If income loses its religious nature, it
National Academy of Customs, Indirect Taxes & Narcotics
Directorate General of Taxpayer Services
CENTRAL BOARD OF EXCISE & CUSTOMS
www.cbec.gov.in
(GOODS AND SERVICES TAX)
GST on Charitable
and Religious Trusts
spaces for business or commerce where charges are ten thousand rupees or more per month.
Thus, the law gives a limited exemption to renting of only religious precincts or a religious place meant for general public by the entity registered under Section 12AA of the Income Tax Act. As per clause (zc) of the said notification, the term “general public” means “the
sufficiently defined by some common quality
The term “religious place” as per the clause (zy) of the said notification means “a place which is primarily meant for conduct
prayers or worship pertaining to a religion, meditation, or spirituality”. Dictionary meaning of “precincts” is an area within the walls or perceived boundaries of a particular building or place, an enclosed or clearly defined area of ground around a cathedral,
properties owned by charitable trusts like marriage hall, convention hall, rest house for pilgrims, shops situated within the premises of a religious place are rented out,
property is wholly exempt from GST. But if such properties are not situated in the precincts of a religious place meaning thereby not within walls or boundary walls of the
letting out will lose this exemption and income from it will be liable to GST.
Income from a religious ceremony organised by a charitable trust is exempt as per the above notification. So the income from Navratri functions,other religious functions, and religious poojas conducted
religious festivals by persons so authorised charitable or religious trust are exempt from
But a careful perusal of this exemption shows that all income from such a religious ceremony is not exempt (services other than by way of conduct of religious ceremony are not exempt). Therefore, the nature of income is an essential factor for ascertaining whether it will be taxable or exempt. If income loses its religious nature, it
National Academy of Customs, Indirect Taxes & Narcotics
Directorate General of Taxpayer Services
CENTRAL BOARD OF EXCISE & CUSTOMS
GSTGST on Charitable
and Religious Trusts
is definitely chargeable to GST. For example, if with regard to Ganesh utsav or other religious functions, charitableout their space to agencies for advertisement hoardings,from such advertisement is chargeable to GST,considered as income from the advertisement services. Further, if donation for religious ceremony is received with specific instructions to advertise the name of a donor, such donation income will be subject to GST. But if donation for religious ceremony is received without such instructions, it may not be subject to GST.
Similarly, entry No.80 of notification no.12/2017-Centralprovides the following exemption to an entity reSection 12AA.
Services by way of training or coaching in recreational activities relating to:
(a) arts or culture, or
(b) sports by charitable entities registered under section 12AA of
the Income-tax Act.
Thus, services provided by way of training recreational activities relating to arts or culture or sports by a charitable entity will be exempt from GST.
GST on management of educational institutions by
If trusts are running schools, colleges or any other
institutions specifically for abandoned, orphans, homelessphysically or mentally abused persons, prisoners or persons over age of 65 years or above residing in a rural area, such activities will be considered as charitable activities and income from such supplies will be wholly exempt from GST.
Meaning of the word rural area defined in said notification is rural area means the area comprised in a village as defined in land revenue records excluding the area under any municipalmunicipal corporation, town area committee, cantonment board or notified area committee or any area that may be notified as an urban area by the Central Government or a State
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Directorate General of T
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GST (GOODS AND SERVICESGST on Charitable
and Religious Trusts
is definitely chargeable to GST. For example, if with regard to charitable trusts rent
hoardings, income GST, as this will be
considered as income from the advertisement services. Further, if donation for religious ceremony is received with specific instructions to advertise the name of a donor, such donation
be subject to GST. But if donation for religious ceremony is received without such instructions, it may not be
Central Tax (Rate), provides the following exemption to an entity registered under
Services by way of training or coaching in recreational activities
sports by charitable entities registered under section 12AA of
or coaching in recreational activities relating to arts or culture or sports by a
by charitable trusts
other educational
homeless children, physically or mentally abused persons, prisoners or persons over age of 65 years or above residing in a rural area, such activities
and income from such
Meaning of the word rural area defined in said notification is rural area means the area comprised in a village as defined in land
municipal committee, municipal corporation, town area committee, cantonment board or notified area committee or any area that may be notified as an
State Government.
Import of Services
Also as per the entry no. 10 of Tax (Rate) dated 28.06.2017, if charitable trusts registered under Section 12AA of Income-tax Act receives any services from provider of services located in non-taxable territory, for charitable purposes, such services received are not chargeable to GST under the reverse charge mechanism.
Services by and to Education Institutions (including institutions run by Charitable trusts)
If the trust is running school for the purpose which is not covered above (i.e. not coming within the scope of charitable activities as defined in the notification), income from such activity will notbe exempt under notification no. 9/201712/2017-Central Tax (Rate), but will be exempt under entry 66 of notification no.12/2017-Central Tax exemption w.r.t supply by and to educational institutions andonly the following services received byexempt:
(1) Transportation of students, faculty
educational institution.
(2) Catering service including any mid
by the Government.
(3) Security or cleaning or house-keeping
institution.
(4) Services relating to admission
examination.
If such school or other educationalby such institution on rent to others, no exemption will be available for such services. Therefore, all services received by educational institutions managed by charitable trusts (for other than charitable activities, as defined) except those services mentioned above are taxable.
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SERVICES TAX)
GST on Charitable
and Religious Trusts
Also as per the entry no. 10 of Notification no.9/2017-Integrated (Rate) dated 28.06.2017, if charitable trusts registered under
tax Act receives any services from provider taxable territory, for charitable purposes,
eived are not chargeable to GST under the reverse
Services by and to Education Institutions (including institutions run
If the trust is running school for the purpose which is not covered thin the scope of charitable activities
as defined in the notification), income from such activity will not be exempt under notification no. 9/2017-Integrated Tax (Rate) or
(Rate), but will be exempt under entry 66 of Tax (Rate). Entry 66 provides for
exemption w.r.t supply by and to educational institutions andonly by eligible educational institution are
faculty and staff of the eligible
Catering service including any mid-day meals scheme sponsored
keeping services in such educational
admission to such institution or conduct of
educational institution gives property owned by such institution on rent to others, no exemption will be available for such services. Therefore, all services received by educational
charitable trusts (for other than charitable activities, as defined) except those services mentioned above are
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axpayer Services
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GSTGST on Charitable
and Religious Trusts
GST on arranging yoga and meditation camp by
Charitable trusts organise yoga camps or other fitness camps and they generally are not free for participants, as trusts charge some amount from the participants in the name of accommodation or participation. If trusts are arranging residential or nonyoga camps by receiving donation or other charges from the participants, these will not be considered charitable activities (as it is different from advancement of religion , spirituality or yoga). Since donation is received for participation, it will be considered commercial activity and it will definitely be covered under the GST. Similarly, if charitable trusts organise fitness camps in reiki, aerobics, etc., and receive donation from participants,that comes under health and fitness services and will also be taxable.
GST on running of public libraries by charitable trusts
No GST will be applicable if charitable trusts are running public libraries and lend books, other publications or knowledgeenhancing content/material from their libraries. This activity is specifically excluded by way of entry No. 50 of Notification No. 12/2017- Central Tax Rate (and is applicable for everyone,charitable trusts); which means services by privateexempt. Thus, if donors of public library remain opencaters to educational, informational and recreational needs of its users and finance for such libraries can be providedsubscription, from special fund created for this pcombination of all such sources, it will be called public library and no GST will be applicable on such services.
GST on hospital managed by charitable trusts
Entryno. 74 of Notification No. 12/2017-Central Tax Rateall persons including charitable trusts) exempts healthcareat clinical establishment, an authorised medical professional or paramedics. As per clause (zg), health care services means any service by way of diagnosis or treatment or care for illness, ideformity, abnormality or pregnancy in any recognised system of medicines in India and includes services by way of transportation
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Directorate General of Taxpayer Services
CENTRAL BOARD OF EXCISE & CUSTOMS
www.cbec.gov.in
GST (GOODS AND SERVICESGST on Charitable
and Religious Trusts
GST on arranging yoga and meditation camp by charitable trusts
Charitable trusts organise yoga camps or other fitness camps and they generally are not free for participants, as trusts charge some amount from the participants in the name of accommodation or
dential or non-residential yoga camps by receiving donation or other charges from the participants, these will not be considered charitable activities (as it is different from advancement of religion , spirituality or yoga).
participation, it will be considered commercial activity and it will definitely be covered under the GST. Similarly, if charitable trusts organise fitness camps in reiki,
participants, such income health and fitness services and will also be
GST on running of public libraries by charitable trusts
No GST will be applicable if charitable trusts are running public libraries and lend books, other publications or knowledge-
aterial from their libraries. This activity is specifically excluded by way of entry No. 50 of Notification No.
Rate (and is applicable for everyone, including private libraries are not
open to all and if it caters to educational, informational and recreational needs of its
provided from donation, subscription, from special fund created for this purpose or from combination of all such sources, it will be called public library and
Rate (applicable to healthcare services
at clinical establishment, an authorised medical professional or paramedics. As per clause (zg), health care services means any service by way of diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognised system of medicines in India and includes services by way of transportation
of the patient to and from a clinical establishment, but does not include hair transplant or cosmetic or plastic surgeundertaken to restore or to reconstructaffected due to congenital defects, developmental abnormalities, injury or trauma. Therefore, all treatment or diagnosis or care for illness, injury, deformity, abnormalitestablishment is covered. Such services provided by doctors and paramedics either provided as an employee (clinical establishment) or in their individual capacity is exempt. Transportation of patients to and from a clinical establishment is also exempt. The clinical establishment, as per clause (s),means a hospital, nursing home, clinic, sanatorium or any other institutionthat offers services or facilities requiring diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognised system of medicines in India, or a place established as an independent entity or a part of an estdiagnostic or investigative services of
So, if charitable trusts run a hospital and appoint specialist doctors, nurses and provide medical servicessuch services are not liable to GST. specialists and these deduct some money from consultation/visit fees payable to doctors and the agreement between hospital and consultant doctors is such that someservices to doctors, there may be GST on such amount deducted from fees paid to doctors.
GST on services provided to charitable trusts
Services provided to charitable trusts are not out of ambit of GST. All services other than those specifically exempted provided to charitable trusts will be subject to GST.
GST on supply of goods by Charitable Trusts
There is no exemption for supply any goods supplied by such charitable trusts for consideration shall be liable to GST. For instance, sale of GST.
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(GOODS AND SERVICES TAX)
GST on Charitable
and Religious Trusts
of the patient to and from a clinical establishment, but does not include hair transplant or cosmetic or plastic surgery, except when
reconstruct anatomy or functions of body affected due to congenital defects, developmental abnormalities, injury or trauma. Therefore, all treatment or diagnosis or care for illness, injury, deformity, abnormality or pregnancy by a clinical establishment is covered. Such services provided by doctors and paramedics either provided as an employee (clinical establishment) or in their individual capacity is exempt. Transportation of patients
ablishment is also exempt. The clinical establishment, as per clause (s),means a hospital, nursing home,
institution by, whatever name called, that offers services or facilities requiring diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognised system of medicines in India, or a place established as an independent entity or a part of an establishment to carry out diagnostic or investigative services of diseases.
So, if charitable trusts run a hospital and appoint specialist doctors, services to patients at a concessional rate,
such services are not liable to GST. If hospitals hire visiting doctors/ specialists and these deduct some money from consultation/visit fees payable to doctors and the agreement between hospital and
some money is charged for providing e may be GST on such amount deducted
GST on services provided to charitable trusts
Services provided to charitable trusts are not out of ambit of GST. All services other than those specifically exempted provided to
rusts will be subject to GST.
GST on supply of goods by Charitable Trusts
of goods by charitable trusts. Thus any goods supplied by such charitable trusts for consideration shall be liable to GST. For instance, sale of goods shall be chargeable to
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