GST on Charitable and Religious Trusts – Analysis

MASD & Co. 15 Feb 2021 4,077 Views 0 comment Print Goods and Services Tax | Articles

♦ What does charitable activity mean under GST Act?

The Goods and Services Act also specifies the criteria to be called a charitable activity. They are:

I. Public Health by Way of:

(A) Care or Counselling of

- - Terminally Ill Persons or Persons with Severe Physical or Mental Disability;
  - Persons Afflicted with HIV or AIDS;
  - Persons Addicted to a Dependence-Forming Substance such as Narcotics Drugs or Alcohol; or

(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 Persons;

c) Prisoners; or

d) Persons over the age of 65 years residing in a Rural area;

IV. Preservation of Environment Including Watershed, Forests and Wildlife.

♦ GST exempts following services provided by entity registered under Section 12AA of the Income-tax Act:

1. Services provided by way of charitable activities [Entry 1 of notification no.12/2017- Central Tax Rate]

2. Services by a person by way of:

a. Conduct of any religious ceremony;

b. Renting of precincts of a religious place meant for general public where room charges are up to Rs. 1,000 per day or Hall Charges are up to Rs. 10,000 per day

[Entry No.13 of notification no.12/2017- Central Tax Rate]

3. Services by way of training or coaching in recreational activities relating to Sports

[Entry No.80 of notification no.12/2017- Central Tax Rate].

4. Any services from provider of services located in non-taxable territory for charitable purposes (i.e. No Reverse Charge Mechanism on import of services)

[Entry no. 10 of Notification no.9/2017-Integrated Tax Rate]

5. Running public libraries and lend books, other publications or knowledge enhancing content/material from their libraries.

[Entry No. 50 of notification no.12/2017- Central Tax Rate]

♦ GST exempts following services (applicable to all persons including charitable trusts):

1. Services provided:

a. by an educational institution (pre-school education to higher secondary school or equivalent) to its students, faculty and staff

[Entry 66 of notification no.12/2017- Central Tax Rate]

b. to an educational institution by way of

(i) Transportation of students, faculty and staff;

(ii) Catering, including any mid-day meals scheme sponsored by the Central Government, State Government or Union territory

(iii) Security or cleaning or housekeeping services performed in such educational institution

(iv) Services relating to admission to, or conduct of examination by, such institution;

[Entry 66 of notification no.12/2017- Central Tax Rate]

2. Healthcare services at clinical establishment, an authorised medical professional or paramedics.

[Entry no. 74 of notification no.12/2017- Central Tax Rate]

3. Services by way of training or coaching in recreational activities relating to arts or culture

[Entry No.80 of notification no.12/2017- Central Tax Rate]

♦ Scenario Analysis

Sr. No	Particulars	GST Applicability
Sr. No	Particulars	For Trust	Non-Trust
1	Fees charged for training Programs, Camps, and Events for charitable activities	No	Yes
2	Fees charged for training Programs, Camps, and Events for non – charitable activities	Yes	Yes
3	Events Organized for Running Schools, Colleges or any other Educational Institutions Specifically for Abandoned, Orphans, Homeless Children, Physically or Mentally Abused Persons, above 65 age in rural area	No	Yes
4	Services provided by Educational Institutions to its students, faculty and staff, including seminars	No	No
5	Services Provided by Coaching Classes to its Students, Faculty and Staff	Yes	Yes
6	Supply of Good against consideration, including sale of scrap	Yes	Yes
7	Donations/Grants received without any benefit to donor	No	No
8	Training or coaching in recreational activities relating to Sports	No	Yes
9	Training or coaching in recreational activities relating to arts or culture	No	No
10	Reverse Charge Mechanism applicable on Import of services	No	Yes
11	Running of Public Libraries	No	Yes
12	Hospital Services	No	No
13	Supply of Goods and Services to Charitable Trusts	NA	Yes
14	Are NGOs liable for registration under GST if turnover, including exempt turnover, exceeds more than 20 lakhs?	Yes
15	Interest on Fixed Deposits to be included while Turnover Computation?	Yes	NA