In re Yeshasvini Co-operative Members Health Care Trust (GST AAR Karnataka)
Summary: The Karnataka Authority for Advance Ruling considered whether annual membership subscriptions received by M/s Yeshasvini Co-operative Members Health Care Trust for implementing the State-sponsored Yeshasvini healthcare scheme qualify for GST exemption under Serial No. 77A of Notification No. 12/2017-Central Tax (Rate), inserted through Notification No. 14/2018-Central Tax (Rate) dated 26 July 2018. The applicant, a non-profit entity registered under Section 12AA/12AB of the Income-tax Act, facilitates cashless treatment at empanelled hospitals for eligible members of co-operative societies and their families. The scheme targets approximately 35–40 lakh co-operative families and provides cashless treatment coverage up to ₹5 lakh per family annually. The applicant argued that the subscriptions were membership fees collected for social welfare services, falling within the exemption limit of ₹1,000 per member per year.
The Authority examined the four conditions of Entry 77A: registration as an unincorporated body or non-profit entity; qualifying welfare or promotional activities; supply of services to the entity’s own members; and receipt of membership fees not exceeding ₹1,000 per member per year. It found the applicant’s non-profit status established by its registration dated 30 October 2023. Considering the objectives and operation of the Yeshasvini Scheme, and the constitutional directives concerning social welfare and public health under Articles 38, 41 and 47, the Authority held that facilitating healthcare for economically vulnerable co-operative members amounts to promotion of social welfare. It also referred to Supreme Court decisions concerning access to medical care, dignified living and the welfare-state principle. The Authority observed that benefits were available only to enrolled scheme members and that the fees collected were incidental to administration of the scheme rather than commercial activity.
On the fee condition, the Authority recorded annual family subscriptions for rural and urban members and additional charges for further family members, concluding that the amounts, when apportioned among covered members, did not exceed the prescribed ₹1,000 per member per year. It therefore ruled that the applicant’s services in implementing and administering the Yeshasvini Scheme are exempt from GST under Entry 77A, subject to continued satisfaction of all prescribed conditions. The source contains apparent transcription inconsistencies in certain rupee figures in the detailed findings; the operative ruling expressly applies the ₹1,000 per-member annual ceiling.
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, KARNATAKA
M/s Yeshasvini Co-operative Members Health Care Trust (herein after referred to as ‘the Applicant or M/s YCMHCT), No.70, 2nd Floor, KMC ing, Off. To Basavanagudi Post Office, K. R. Road, Basavanagudi, Bangalore-560004 having User ID 292500001004AR2, have filed an application for Advance Ruling under Section 97 of CGST Act, 2017 read with Rule 104 of CGST Rules, 2017 and Section 97 of KGST Act, 2017 read with Rule 104 of KGST Rules, 2017.
2. M/s YCMHCT is a non-profit entity registered under Section 12AA of the Income Tax Act, 1961. It has been established to implement the “Yeshasvini Scheme”, a healthcare scheme introduced by the Government of Karnataka for members of co-operative societies.
The main objective of M/s YCMHCT is to provide affordable healthcare services to members of co-operative societies and their families on payment of prescribed annual subscription/membership fee. Under the scheme, members are provided cashless medical treatment facilities through empanelled network hospitals, thereby reducing the financial burden of medical expenses.
Any person who is a member of a co-operative society (rural or urban), self-help groups organized by co-operative societies, co-operative fishermen societies, co-operative beedi workers societies, or co-operative weavers societies, and who has completed at least one months of membership in such society, is eligible to enroll under the “Yeshasvini Scheme” by paying the prescribed annual membership fee.
3. In view of the above, the applicant has sought advance ruling in respect of the following questions:
i. Whether the applicant which is a non- profit entity registered under any law engaged for the welfare of its members & family is eligible to avail the benefit of exemption contained in serial no. 77A of Notification No. 14/2018 Central Tax ( Rate) Dated 26.07.2018 toward amount collected from members nual subscription.
4. Admissibility of The Application: The applicant, under Column 13 of Form ARA-01, has selected category of issues, “Applicability of a notification issued under the provisions of this Act”. On examination of the nature of the question raised and the issue involved, it is found that the Applicant has correctly selected the said category of issue. Accordingly, the present application is held to be admissible in terms of Sections 97(2) (b) of the COST Act, 2017.
5. Brief Facts of the Case: –
5.1 The Applicant (M/s YCMHCT) is a non-profit entity registered under Section 12AA of the Income Tax Act, 1961. It has been established to implement the “Yeshasvini Scheme”, a healthcare scheme introduced by the Government of Karnataka for members of co-operative societies. Any person who is a member of a co-operative society (rural or urban), self-help groups organized by co-operative societies, co-operative fishermen societies, cooperative beedi workers societies, or co-operative weavers societies, and who has completed at least one months of membership in such society, is eligible to enroll under the “Yeshasvini Scheme” by paying the prescribed annual membership fee. Along with primary member, dependent eligible family members can also become Yeshasvini Members by paying additional membership fee. Under the scheme, members are provided cashless medical treatment facilities through empanelled network hospitals, thereby reducing the financial burden of medical expenses.
5.2 The scheme will target about 35 to 40 lakh Co-operative families, ( deprived rural families, farmers and identified occupational category of urban families as per the latest Socio-Economic Caste Census data) covering both rural and urban areas. For the purpose of the “Yeshasvini scheme”, “family” means the principle applicant, his/her father/mother, husband/wife, sons, unmarried daughters, daughters-in-laws and their grandchildren (Children of sons).
5.3 At present for a member of rural Co-operative societies, annual subscription of Rs. 500/- is collected for a family comprising Maximum of four members and Rs. 100/- extra amount will be collected for each of the eligible additional family members, for urban societies members , it will be Rs. 1000/-and Rs. 200 respectively . Annual membership contribution of the SC/ST members is met by the State Government. Further there are no age limit for individuals to become the members, just born to till death are eligible under this scheme. The beneficiaries shall be the people of Karnataka in particular and more particularly without any distinction or regard to any religion, race, caste, creed, community, sex, place of birth or anyone or all of them.
5.4 Member family will be provided a plastic card with a unique ID number, which enables them an access to cashless treatment up to Rs. 5.00 lakhs per year per family at Yeshasvini network hospitals across the State. Members can avail 1650 different treatment procedures and 478 ICUs totalling to 2128 procedures (as covered under the Abark scheme).
5.5 Ineligible Categories: Members of liquidated or defunct Co- operative societies, members of employee’s co-operative societies, Government Employee or employees in private sector drawing a salary of more than Rs. 30,000/- per month are not eligible for the said scheme.
6. Applicant’s Interpretation of Law: –
6.1 M/s YCMHCT is a nonprofit entity registered under Section 12AA of the Income Tax Act, 1961 and engaged in promotion of social welfare of its members by providing affordable healthcare services falls within the ambit of serial number 77A of Notification No. 14/2018- Central Tax ( Rate) dated 26.07.2018, as amended and thus consideration received by the M/s YCMHCT from its members in the form of nominal annual subscription charges/annual membership charges up to an amount of Rs.1000/- per member per year is exempted from GST.
6.2 Further, the applicant has submitted that as per Section 7 (1) (aa) supply includes the activities or transactions, by a person, other than an individual, to its members or constituents or vice versa, for cash, deferred payment or other valuable consideration and the person and its members or constituents shall be deemed to be two separate persons and the supply of activities or transactions inter se shall be deemed to take place from one such person to another.
In view of the above, the activity of the applicant shall fall within the scope of supply on which the levy of GST will apply as per Section 9 of the CGST Act, 2017.
6.3 Furthermore, the applicant has submitted that Section 11 of CGST Act, 2017, empowers the Government to notify exemptions and through Notification No. 12/2017- Central Tax (Rate) Dated 28.06.2017 as amended by Notification No. 14/201/- Central Tax ( Rate) dated 26.07.2018 exempted the service provided by an unincorporated body or a non-profit entity registered under any law for time being in force, engaged in promotion of social welfare of its own members against consideration in the form of membership fee up to an amount of one thousand rupees per member per year vide Entry No. 77 A. Thus, the services provided by them is exempted from GST up to an amount of Rs. 1000/- per member per year.
7. PERSONAL HEARING PROCEEDINGS HELD ON 20.05.2026
Miss Kishori Shivaputra Patil, CA, the duly authorised representative of the applicant, appeared for the personal hearing held on 20.05.2026 before this She reiterated the facts and submissions already made in the application. She therefore requested that an Advance Ruling be issued on the questions raised in the application.
FINDINGS & DISCUSSION
8. At the outset we would like to make it clear that the provisions of the CGST Act, 2017 and the KGST Act, 2017 are in pari materia and have the same provisions in like matters and differ from each other only on a few specific provisions. Therefore, unless a mention is particularly made to such dissimilar provisions, a reference to the CGST Act, 2017 would also mean reference to the corresponding similar provisions in the KGST Act, 2017.
9. We have considered the submissions made by the applicant in their application for advance ruling. We have also considered the issues involved on which advance ruling is sought by the applicant, relevant facts, and the arguments made by the applicant and the submissions made by their learned representative during the time of hearing.
10. We have carefully examined the application made by the applicant (M/s YCMHT), the submissions provided therein, the arguments advanced during the personal hearing. The main issues for consideration are:-
1. Applicability of a notification issued under the provisions of this Act”
11. The applicant seeks advance ruling in respect of the question mentioned at para 3 supra. We proceed to answer the question.
12. The question raised by the applicant is:
“Whether the applicant which is a non- profit entity registered under any law engaged for the welfare of its members & family is eligible to avail the benefit of exemption contained in serial no. 77A of Notification No. 14/2018 -Central Tax ( Rate ) Dated 26.07.2018 toward amount collected from members as annual subscription?
12.1 In this regard, the Applicant submits they are a nonprofit entity registered under Section 12AA of the Income Tax Act, 1961 and engaged in promotion of social welfare of its members by providing affordable healthcare services falls within the ambit of serial number 77A of Notification No. 14/2018-Central Tax ( Rate) dated 26.07.2018, as amended and thus consideration received by the M/s YCMHCT from its members in the form of nominal annual subscription charges/annual membership charges up to an amount of Rs.1000/- per member per year is exempted from GST.
Accordingly, the Applicant is of the considered view that the activities performed by them is exempted under serial Number 77A of Notification No. 14/218- Central Tax ( Rate) dated 26.07.2018 for up to an amount of Rs. 1000/- per member per year.
12.2 The issue before us is whether the services provided by the Applicant in implementation and administration of the State-sponsored health scheme qualify as services by an entity registered under section 12AA/12AB of the Income Tax Act, 1961 by way of promotion of social welfare”, covered under Serial No. 77A of Notification No. 12/2017-CT (Rate) dated 28.06.2017 as amended vide Notification No. 14/2018-Central Tax (Rate) dated 26.07.2018 or not.
12.3 The Serial No. 77A of Notification No. 12/2017- Central Tax ( Rate) dated 28.06.2017 as amended vide Notification No. 14/2018- Central Tax ( Rate) dated 26.07.2018 is reproduced below for analyse the issue before us.
| Sl. No. | Chapter, Section, Heading, Group or Service Code (Tariff) | Description of Services | Rate per cent | Condition |
| 77A | Heading 9995 | “Services provided by an unincorporated body or a non-profit entity registered under any law for the time being in force, engaged in—
(a) activities relating to the welfare of industrial or agricultural labour or farmers; or (b) promotion of trade, commerce, industry, agriculture, art, science, literature, culture, sports, education, social welfare, charitable activities and protection of environment; to its own members against consideration in the form of membership fee up to an amount of ₹1,000 per member per year.” |
NIL | NIL |
12.4 To qualify for exemption under the above quoted entry, all of the following conditions must be satisfied by the applicant.
(1) Nature of the supplier:
The applicant must be either:
- An unincorporated body or
- A non-profit entity and
- It must be registered under any law for the time being in force.
(2). Nature of activities:-
The applicant must be engaged in at least one of the following categories:
A. Welfare-related activities:-
1. Welfare of industrial labour
2. Welfare of agricultural labour
3. Welfare of farmers
B. Promotional or charitable activities of:-
1. Promotion of trade
2. Promotion of commerce
3. Promotion of industry
4. Promotion of agriculture
5. Promotion of art
6. Promotion of science
7. Promotion of literature
8. Promotion of culture
9. Promotion of sports
10. Promotion of education
11. Promotion of social welfare
12. Promotion of charitable activities
13. Protection of environment
3. Recipient of Service:-
The services must be supplied to its own members only.
4. Consideration in the Form of Membership Fee and Prescribed Annual Monetary Limit:-
The consideration must be received in the form of membership fee and it does not exceed Rs.1000 per member per year.
12.5 Examination of above said Conditions:-
For determining the eligibility of exemption under the said serial number, it is necessary to examine whether all the prescribed conditions as stated above are satisfied by the applicant or nor. The conditions are examined individually as under:
12.5.1 Condition No. 1: Whether the Applicant is an unincorporated body or a non-profit entity registered under any law for the time being in force?
At the outset, we examine whether the Applicant satisfies the first `t: ,2</() ition prescribed under the exemption entry, namely that the service provider should be an unincorporated body or a non-profit entity registered under any law for the time being in force.
On perusal of the documents furnished by the Applicant, it is observed that the Applicant is a non-profit entity established by the Government of Karnataka. Further, the Applicant is registered under Section 12AA/ 12AB of the Income Tax Act, 1961 vide Registration No. AAATY9410C23BL01 dated 30.10.2023. The said registration establishes that the Applicant is a nonprofit entity recognized under a law for the time being in force.
Accordingly, we hold that the Applicant satisfies the first condition of the exemption entry, being a non-profit entity registered under a law for the time being in force.
12.5.2 Condition No. 2: Whether the Applicant is engaged in activities relating to:
- welfare of industrial labour, agricultural labour or farmers; or
- Promotion of trade, commerce, industry, agriculture, art, science, literature, culture, sports, education, social welfare, charitable activities or protection of environment.
(A) At the outset, it is observed from the records that the Applicant is a non-profit entity established by the Government of Karnataka for the implementation, supervision and administration of the “Yeshasvini Scheme”, a welfare-oriented healthcare scheme intended primarily for members of cooperative societies and other economically weaker sections of society. Under the scheme, members of co-operative societies, self-help groups organized by co-operative societies, co-operative fishermen societies, co-operative beedi workers societies, co-operative weavers societies and other eligible beneficiaries are entitled to enrol and avail cashless medical treatment through empanelled hospitals.
The Applicant functions as the nodal agency for implementation and situation of the scheme and facilitates access to medical treatment through a network of empanelled hospitals. The scheme is designed to cover approximately 35 to 40 lakh co-operative families, including deprived rural families, farmers and identified occupational categories of urban families, based on the latest Socio-Economic Caste Census data. The primary objective of the scheme is to reduce the financial burden of medical treatment and improve access to healthcare for economically vulnerable sections of society.
(B) We find that the term “social welfare” has not been specifically defined under the CGST Act, 2017 or Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. Therefore, the expression is required to be interpreted in its ordinary, natural and purposive sense, having regard to the object sought to be achieved by the exemption entry.
In this regard, reference may be made to the constitutional framework governing welfare measures in India. The Constitution envisages India as a welfare State committed to securing social and economic justice and promoting the well-being of its citizens. Article 38 directs the State to promote the welfare of the people by securing a social order informed by justice. Article 41 recognizes the obligation of the State to provide public assistance in cases of sickness and disablement. Article 47 further casts a duty upon the State to improve public health. These constitutional directives demonstrate that public healthcare and medical assistance to economically weaker sections constitute essential welfare functions of the State.
The activities undertaken by the Applicant in implementing and administering a healthcare scheme that provides access to cashless medical treatment are directly aligned with these constitutional objectives and are intended to advance the welfare and well-being of vulnerable sections of society.
(C) We also take note of the judicial pronouncements relied upon by the Applicant. In Paschim Banga Khet Mazdoor Samity v. State of West Bengal, the Hon’ble Supreme Court recognized the right to health and medical care integral component of Article 21 of the Constitution and emphasized the obligation of the State to provide adequate medical facilities. In D. S. Nakara v. Union of India, the Hon’ble Supreme Court observed that welfare measures are intended to ensure a dignified life for citizens. Further, in State of Karnataka v. Shri Ranganatha Reddy, the Hon’ble Supreme Court reiterated that India is a welfare State and welfare legislations should be interpreted in a manner that advances the underlying social objectives.
(D) In the present case, the Applicant is not engaged in any commercial or
profit-oriented activity. Its primary and dominant objective is the implementation and administration of a State-sponsored healthcare scheme for the benefit of economically weaker and vulnerable sections of society. The membership fee collected from beneficiaries is merely incidental to the administration and operation of the scheme and does not alter the essential welfare character of the activities undertaken by the Applicant.
(E) It is a settled principle of interpretation that provisions intended to promote public welfare and social benefit should receive a purposive construction so as to advance the legislative intent. Accordingly, the expression “promotion of social welfare” appearing in the exemption entry is required to be interpreted in a broad and liberal manner, consistent with the constitutional mandate of promoting public health and social justice.
(F) In view of the foregoing, we find that:
(i) the Applicant is a non-profit entity established for implementation and administration of a State-sponsored healthcare scheme;
(ii) the scheme provides access to medical assistance and cashless treatment to economically weaker and vulnerable sections of society, including farmers and members of co-operative societies;
(iii) the activities undertaken by the Applicant directly contribute to public health and social welfare in furtherance of the constitutional objectives embodied in Articles 38, 41 and 47 of the Constitution of India; and
(iv) the membership fee collected by the Applicant is merely incidental to the implementation of the scheme and does not impart a commercial character to the activity.
Accordingly, we hold that the activities undertaken by the Applicant in implementing, administering and monitoring the Yeshasvini Scheme constitute activities relating to the promotion of social welfare. Therefore, the Applicant satisfies the second condition prescribed under the exemption entry.
12.5.3 Condition No. 3: Whether the services are provided by the Applicant to its own members.
On perusal of the records, it is observed that under the Yeshasvini Scheme, any person who is a member of a co-operative society or co-operative bank (including urban and rural co-operative societies), a co-operative self-help group, or a multi-state co-operative society functioning within the State of Karnataka, and who has completed the prescribed period of membership, is eligible to enroll under the Scheme.
Upon enrollment and payment of the prescribed membership fee for themselves and their eligible family members, such persons and their family members become members of the Yeshasvini Scheme and are entitled to avail the benefits provided thereunder, including access to cashless medical treatment through empanelled hospitals.
Thus, the benefits and services under the Scheme are available only to persons who have enrolled as members of the Scheme upon payment of the prescribed membership fee. No services are provided to non-members.
Accordingly, we hold that the Applicant satisfies the third condition of the exemption entry, namely that the services are provided exclusively to its own members.
12.5.4 Condition No. 4: Whether the consideration received for such services is in the nature of membership fee and membership fee does not exceed Rs. 1000/- per member per year.
On perusal of the records, it is observed that under the Yeshasvini Scheme, an annual contribution of 2500 per family comprising up to four members belonging to Rural Co-operative Societies/Self-Help Groups is collected. In cases where the family consists of more than four members, an additional contribution of U00 per annum is collected for each additional member.
Similarly, in respect of members of Urban Co-operative Societies, an annual contribution of Z1,000 per family comprising up to four members is collected. Where the family consists of more than four members, an additional contribution of 2200 per annum is collected for each additional member.
It is evident from the above that the amount collected by the Applicant from the beneficiaries is in the nature of membership fee for enrolment and continuation under the Scheme. Further, the contribution payable, when apportioned among the covered members, does not exceed Z1,000 per member per year.
Accordingly, we hold that the Applicant satisfies the fourth condition of the exemption entry, namely that the consideration is received in the form of membership fee and that the membership fee does not exceed 21,000 per member per year.
12.6 In view of the foregoing discussion and findings, we hold that the Applicant satisfies all the conditions prescribed under Serial No. 77A of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended. Specifically, the Applicant is a non-profit entity registered under a law for the time being in force; is engaged in activities relating to the promotion of social welfare; provides services exclusively to its own members; and receives consideration in the form of membership fee not exceeding the prescribed limit of Z1,000 per member per year.
Accordingly, the services provided by the Applicant to its members in relation to the implementation and administration of the Yeshasvini Scheme are covered under Serial No. 77A of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended, and are therefore exempt from levy of GST, subject to continued fulfilment of all the conditions specified therein.
13. In view of the foregoing, we pass the following.
RULING
Question:- Whether the applicant which is a non- profit entity registered under any law engaged for the welfare of its members & family is eligible to avail the benefit of exemption contained in serial no. 77A of Notification No. 14/2018 -Central Tax ( Rate ) Dated 26.07.2018 toward amount collected from members as annual subscription.
Answer:- The activities undertaken and services provided by the applicant are in nature of promotion of social welfare and covered under Serial No. 77A of Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017, as amended. Accordingly, the said services are exempt from levy of GST under COST/ KGST Act, 2017 subject to fulfilment of the conditions prescribed therein (i, e membership fees is Up to an amount of Rs. 1000/- per member per year.).
