CA, Designated Partner, ACA, M.com
A. GST Implication:
Notification No.12/2017-Central Tax (Rate) dated 28th June 2017 exempts services provided by entity registered under Section 12AA of the Income-tax Act, 1961 by way of charitable activities from whole of GST, vide entry No. 1 of the notification. The charitable trust or NGO must be registered under Section 12AA of the Income Tax Act, and the services provided by the charitable trust or the NGO are exempt from GST if the same are provided for a charitable cause.
B. Definition of Charitable Activities
Charitable activities which has been defined in the notification as “charitable activities” means activities relating to:
1. Public health services
Counseling of terminally ill persons or counseling for physically disabled
Counseling for people affected with HIV or AIDS
Counseling for alcohol-dependent persons
Public awareness of preventive health, family planning or prevention of HIV infection
2. Promoting of religion, spirituality, or yoga
Promoting educational programs or skill development relating to :
i. Physically or mentally abused person
iii. Orphaned, homeless, or abandoned children
iv. Rural area residents over the age of 65
3. Preservation of environment including watershed, forests and wildlife
If any charitable trust or an NGO does not meet at least two of the criteria, then GST will be applicable and the entity must register under GST.
4. List of Services provided by Charitable Trust or NGO- Exempt from GST:
1. 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.
2. Residential programmes or camps or events 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.
3. Donation for religious ceremony is received without such instructions.
4. Renting of Religious Place meant for general public (owned and managed by a registered charitable trust under 12AA of the Income Tax Act, 1961). GST will be exempted when: Rent out rooms are charged lesser than Rs.1,000 a day. Kalyanamandapam or an open area is charged lesser than Rs.10,000 a day. Rent out shops and other spaces for business are charged less than Rs.10,000 a
5. Income from Navratri functions, other religious functions, and religious poojas conducted on special
occasions like religious festivals by persons so authorized for this purpose by the charitable or religious trust
5. List of Services provided by Charitable Trust or NGO- Taxable under GST :
1. Sale of Goods that are sold by a charitable trust is taxable.
2. Services other than by way of conduct of religious ceremony which are not considered as charitable activities, as defined above.
3. Renting of premises for rentals above the threshold limits
4. Services of sponsorship, GST will be applicable on Reverse Charge Mechanism.
5. Advertising rights during conduct of events/functions etc.
6. Donation for religious ceremony is received with specific instructions to advertise the name of a donor.