Dayal Kundani

This article covers applicability of GST on Charitable and Religious Trust

The provisions related to tax ability pre GST have been borrowed and carried over under GST regime. The comparison is tabled below

Import of Services under Service Tax

Under the service tax regime vide Notification no 1/2017 service tax dated 12/01/2017, specifically provided exemption to an entity registered under 12AA of the Income tax Act from payment of service tax under reverse charge for service received from a provider located in a non-taxable territory.

Import of Services under GST

Similar exemption is available to an entity registered under 12AA when services were received from a provider located in a non-taxable territory under Notification No. 9/2017 – Integrated Tax (Rate)

Sl. No. Chapter, Section, Heading, Group or Service Code (Tariff) Description of Services Rate (per cent.) Condition
10 Chapter 99 Services received from a provider of service located in a non- taxable territory by –

(a) ———

(b) an entity registered under section 12AA of the Income-tax Act, 1961 (43 of 1961) for the purposes of providing charitable activities; or

Nil Nil

 Services provided

Notification No. 9/2017 – Integrated Tax (Rate) provides exemption to Services by an entity registered under section 12AA

Sl. No. Chapter, Section, Heading, Group or Service Code (Tariff) Description of Services Rate (per cent.) Condition
1 Chapter 99 Services by an entity registered under section 12AA of the Income-tax Act, 1961 (43 of 1961) by way of charitable activities. Nil Nil
14 Heading 9963 or Heading 9972 or Heading 9995 or any other Heading of Section 9 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, owned or managed by an entity registered as a charitable or religious trust under section 12AA of the Income-tax Act, 1961 (hereinafter referred to as the Income-tax Act) or a trust or an 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 of the said Income-tax Act: Provided that nothing contained in entry (b) of this exemption shall apply to,-

(i) renting of rooms where charges are one thousand rupees or more per day;

(ii) renting of premises, community halls, kalyanmandapam or open area, and the like where charges are ten thousand rupees or more per day;

(iii) renting of shops or other spaces for business or commerce where charges are ten thousand rupees or more per month.

Nil Nil

(r) “charitable activities” means activities relating to –

(i) public health by way of ,-

(A) care or counseling of

(I) terminally ill persons or persons with severe physical or mental disability,

(II) persons afflicted with HIV or AIDS,

(III) persons addicted to a dependence-forming substance such as narcotics drugs or alcohol;

(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;

Services provided – Taxable Territory

Notification No. 12/2017 – Central Tax Rate exempts the intra- State supply of services by charitable trust

Sl. No. Chapter, Section, Heading, Group or Service Code (Tariff) Description of Services Rate (per cent.) Condition
1 Chapter 99 Services by an entity registered under section 12AA of the Income-tax Act, 1961 (43 of 1961) by way of charitable activities. Nil Nil
13 Heading 9963 or Heading 9972 or Heading 9995 or any other Heading of Section 9 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, owned or managed by an entity registered as a charitable or religious trust under section 12AA of the Income-tax Act, 1961 (hereinafter referred to as the Income-tax Act) or a trust or an 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 of the said Income-tax Act: Provided that nothing contained in entry (b) of this exemption shall apply to,-

(i) renting of rooms where charges are one thousand rupees or more per day;

(ii) renting of premises, community halls, kalyanmandapam or open area, and the like where charges are ten thousand rupees or more per day;

(iii) renting of shops or other spaces for business or commerce where charges are ten thousand rupees or more per month.

Nil N
80 Heading 9996 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.

Nil Nil
83 Heading 9996 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.

Nil Nil

An Income received from services which do not constitute or is not religious in nature then such service would be a taxable supply under GST

Illustrative examples of income other than charitable activity would be

1. Receiving income for advertisement hoardings with regard to religious functions

2. Donations received with specific instructions to advertise name of donor

3. Holding seminar is not a charitable activity

The list is illustrative only and not a complete list, one may evaluate the income in terms of the activity performed and determine the applicability of GST

To summarize the understanding

1. Exemption from GST if activities fall under the definition of charitable trust as envisaged under the notification

2. Exemption from GST under Reverse Charge for services received from a non-taxable territory

3. No exemption is available to a registered supplier providing services to an entity registered under 12AA except for exempted services as notified

4. No exemption from registration for payment under reverse charge for services received from an unregistered supplier of services / goods located in the taxable territory.

5. No exemption if goods are supplied by religious trust

Hope your find the above information useful

The clarification and understanding of the above does not constitute a professional advice, but are based on interpretation of the statute. One may refer to the FAQ’s released by CBEC and accordingly evaluate provision of services

(The author can be reached at dayalkundani@gmail.com)

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