Shivani Jain (CA, CS)
> What is Corporate Social Responsibility (CSR)?
> Relevant GST Provisions
> Advance rulings on CSR
The ruling also stated that the Service tax circular 127/09/2010-ST dated 16.8.2010 would not be applicable in this case as there is a nexus between the funds granted and the activities directed to be undertaken. Further, it was also mentioned that if the CSR activities are covered under the charitable activities covered in Notification 12/2017- Central Tax (Rate) (‘Exemption Notification’), then GST would not be levied on such activities.
> Possible modes to discharge CSR liabilities and GST implications
No GST liability since no payment made to the external agency. No ITC available on the goods distributed free of cost in CSR activities.
GST applicable except the following services stated in Exemption Notification (provided by entities registered under section 12AA of Income Tax Act):
♦ Training or coaching in recreational activities relating to arts or culture, or sports
♦ public health by way of care and counseling 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;
♦ public awareness of preventive health, family planning or prevention of HIV infection;
♦ advancement of religion , spirituality or yoga;
♦ advancement of educational programmes or skill development relating to abandoned, orphaned or homeless children, physically or mentally abused and traumatized persons, prisoners, or persons over the age of 65 years residing in a rural area;
♦ preservation of environment including watershed, forests and wildlife
> To sum up:
|1||Grants in Aid/ Cash donations||Not taxable|
|2a||Grants to external agencies for specified beneficiaries where charitable purposes are covered under exemption notification||Not taxable|
|2b||Grants to external agencies for specified beneficiaries where charitable purposes are not covered under exemption notification||Taxable|
> Author’s view:
Since CSR activities is mandatory compliance for companies, it should be considered in furtherance of business. Also, ITC on input goods and services should be allowed. Thus, Government shall take into consideration and issue necessary clarifications.