GST ON SERVICES PROVIDED BY CHARITABLE/RELIGIOUS TRUST

Services provided by an entity registered under section 12AA of the Income-tax Act, 1961 by way of charitable activities are exempt from GST. Thus, in order to claim exemption, following two conditions must be satisfied:

  1. The entity should be registered under section 12AA of the Income tax Act,1961, and

  2. The entity must carry out one or more of the specified charitable activities.

Before proceeding further, let us first understand the meaning of term ‘charitable activities’. The term ‘charitable activities’ mean 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; 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/ 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 & wildlife.

Thus, only those services provided by a charitable and religious trusts [registered under section 12AA of the Income- tax Act] which fall within the above definition of charitable activities, are eligible for exemption from GST. There could be many other services provided by such charitable and religious trusts which are not covered by the definition of charitable activities and hence, such services would attract GST.

For instance , grant of advertising rights to a person on the premises of the charitable/religious trust or on publications of the trust, or granting admission to events, functions, celebrations, shows against admission tickets or fee etc. would attract GST. In the following paras, we have examined some of the services provided by the entities registered under section 12AA of the Income-tax Act:

Management of educational institutions by charitable trusts

  • Activities of schools, colleges or any other educational institutions run by charitable trusts by way of education or skill development of abandoned, orphans, homeless children, physically or mentally abused persons, prisoners or persons over age of 65 years or above residing in a rural area , will be considered as charitable activities and income from such supplies will be wholly exempt from GST.

  • Activities of a school, college or an institution run by a trust which do not come within the ambit of charitable activities will not be exempt.

 

Hostel accommodation provided by trusts

  • Hostel accommodation services provided by trusts to students do not fall within the ambit of charitable activities as defined above.

  • However, accommodation service in hostels including such services provided by trusts having declared tariff below Rs. 1,000 per day is exempt.

 

Religious yatras or pilgrimage

  • Religious Yatras/ pilgrimage organised by any charitable or religious trust are not exempt. Further, services of transportation of passengers for a pilgrimage by the charitable trust are not exempt from GST.

  • Only such services of religious pilgrimage as are provided by specified organization in respect of a religious pilgrimage facilitated by the Government of India (GoI), under bilateral arrangement, are exempt from GST. The term specified organization as referred herein means-

    • Kumaon Mandal Vikas Nigam Limited (KMVN), a Government of Uttarakhand Undertaking; or

    • ‘Haj Committee of India’ or ‘State Haj Committee including Joint State Committee’.

  • Hence the services provided by the Haj Committee and KMVN in relation to a religious pilgrimage facilitated by GoI are not liable to GST.

 

Arranging yoga and meditation camp by charitable trusts

  • As discussed above, services provided by entity registered under section 12AA of the Income -tax Act, 1961 by way of advancement of religion, spirituality or yoga are exempt as such activities are covered in definition of charitable activities.

  • Fee or consideration charged in any other form from the participants for participating in a religious, yoga or meditation programme or camp meant for advancement of religion, spirituality or yoga shall be exempt.

  • Residential programmes or camps where the fee charged includes cost of lodging and boarding shall also be exempt as long as the primary and predominant activity, objective and purpose of such residential programmes or camps is advancement of religion, spirituality or yoga.

  • However, if charitable or religious trusts merely or primarily provide accommodation or serve food and drinks against consideration in any form including donation, such activities will be taxable. Similarly, activities such as holding of fitness camps or classes such as those in aerobics, dance, music etc. will be taxable.

  • Example – Bhavyajyoti Foundation, a charitable trust registered under section 12AA of the Income-tax Act, 1961, has organized a ‘Meditation Camp’ for the old age people. GST would be exempt on the same as services provided by entity registered under section 12AA of the Income -tax Act, 1961 by way of advancement of religion, spirituality or yoga are exempt.

 

Hospitals managed by charitable trusts

Exemption is available to health care services including services provided by a clinical establishment, an authorised medical practitioner or paramedics of a religious or charitable trust.

 

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

are exempt from GST.

 

GST on services provided TO charitable trusts

Services provided to charitable or religious trusts are not outside the ambit of GST. Unless specifically exempted, all goods and services supplied to charitable or religious trusts are leviable to GST.

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