GST PROVISIONS RELATING TO CHARITABLE TRUSTS/NGO’spuneicai.org/wp-content/uploads/Download-22.pdfGST PROVISIONS RELATING TO CHARITABLE TRUSTS/NGO’s For Seminar at ICAI Bhavan ,Pune

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

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(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


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



www.cbec.gov.in

(GOODS AND SERVICES TAX)

GST on Charitable


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






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


Directorate General of T


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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


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


axpayer Services




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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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


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




Documents

GST PROVISIONS RELATING TO CHARITABLE TRUSTS/NGO’spuneicai.org/wp-content/uploads/Download-22.pdfGST PROVISIONS RELATING TO CHARITABLE TRUSTS/NGO’s For Seminar at ICAI Bhavan ,Pune