What does charitable activity mean under GST Act?
The Goods and Services Act also specifies the criteria to be called a charitable activity. They are:
I. Public Health by Way of:
(A) Care or Counselling 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; 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 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;
V. Preservation of Environment Including Watershed, Forests and Wildlife.
GST exempts following services provided by entity registered under Section 12AA of the Income-tax Act:
- Services provided by way of charitable activities
[Entry 1 of Notification No.12/2017 – Central Tax Rate]
- Services by a person by way of:
- Conduct of any religious ceremony;
- Renting of precincts of a religious place meant for general public where room charges are up to Rs. 1,000 per day or Hall Charges are up to Rs. 10,000 per day
[Entry No.13 of notification no.12/2017- Central Tax Rate]
- Services by way of training or coaching in recreational activities relating to Sports
[Entry No.80 of notification no.12/2017-Central Tax Rate].
- Any services from provider of services located in non-taxable territory for charitable purposes (i.e. No Reverse Charge Mechanism on import of services)
[Entry no. 10 of Notification no.9/2017-Integrated Tax Rate]
- Running public libraries and lend books, other publications or knowledge enhancing content/material from their libraries.
[Entry No. 50 of Notification No. 12/2017- Central Tax Rate]
GST exempts following services (applicable to all persons including charitable trusts):
- Services provided:
- by an educational institution (pre-school education to higher secondary school or equivalent) to its students, faculty and staff
[Entry 66 of notification no.12/2017-Central Tax Rate]
- to an educational institution by way of
- Transportation of students, faculty and staff;
- Catering, including any mid-day meals scheme sponsored by the Central Government, State Government or Union territory
- Security or cleaning or housekeeping services performed in such educational institution
- Services relating to admission to, or conduct of examination by, such institution;
[Entry 66 of notification no.12/2017-Central Tax Rate]
- Healthcare services at clinical establishment, an authorised medical professional or paramedics.
[Entry no. 74 of Notification No. 12/2017-Central Tax Rate]
- Services by way of training or coaching in recreational activities relating to arts or culture
[Entry No.80 of notification no.12/2017-Central Tax Rate]
Scenario Analysis
Sr. No | Particulars | GST Applicability | |
For Trust | Non-Trust | ||
1 | Fees charged for training Programs, Camps, and Events for charitable activities | No | Yes |
2 | Fees charged for training Programs, Camps, and Events for non – charitable activities | Yes | Yes |
3 | Events Organized for Running Schools, Colleges or any other Educational Institutions Specifically for Abandoned, Orphans, Homeless Children, Physically or Mentally Abused Persons, above 65 age in rural area | No | Yes |
4 | Services provided by Educational Institutions to its students, faculty and staff, including seminars | No | No |
5 | Services Provided by Coaching Classes to its Students, Faculty and Staff | Yes | Yes |
6 | Supply of Good against consideration, including sale of scrap | Yes | Yes |
7 | Donations/Grants received without any benefit to donor | No | No |
8 | Training or coaching in recreational activities relating to Sports | No | Yes |
9 | Training or coaching in recreational activities relating to arts or culture | No | No |
10 | Reverse Charge Mechanism applicable on Import of services | No | Yes |
11 | Running of Public Libraries | No | Yes |
12 | Hospital Services | No | No |
13 | Supply of Goods and Services to Charitable Trusts | NA | Yes |
14 | Are NGOs liable for registration under GST if turnover, including exempt turnover, exceeds more than 20 lakhs? | Yes | |
15 | Interest on Fixed Deposits to be included while Turnover Computation? | Yes | NA |
Authors
CA Shreyans Dedhia
Partner | shreyans.dedhia@masd.co.in
CA Prashant Taparia
Partner | prashant.taparia@masd.co.in
Meet Faria
Associate Consultant | meet.faria@masd.co.in
Riddhesh Patel
Associate Consultant | riddhesh.patel@masd.co.in
