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Exemption to Trust from GST
- As per Notification No. 12/2017 – Central Tax (Rate) dated 28thJune, 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, which specifies that “Services by an entity registered under section 12AA of Income Tax Act, 1961 by way of charitable activities” are exempt from GST. Thus as per this notification, exemption is given to the charitable trusts, only if the following conditions are satisfied:
- Entities must be registered under section 12AA of the Income Tax Act, and
- Such services or activities by the entity are by way of charitable activities.
Thus, it is essential that the activities must conform to the term “charitable activities”, which has been defined in the notification as under “charitable activities”.
Activities relating to:
(i) public health by way of:
(A) care or counselling 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 or skill development relating to:
(a) Abandoned, orphaned or homeless children;
(b) physically or mentally abused and traumatised persons;
(c) prisoners; or
(d) persons over the age of 65 years residing in a rural area;
(iv) preservation of environment including watershed, forests and wildlife.
- Entry No. 13 of Notification No. 12/2017 – Central Tax (Rate) dated 28thJune, 2017, provides the following exemption to entities registered under section 12AA of the Income Tax Act.
Services by a person by way of:
- conduct of any religious ceremony;
- renting of precincts of a religious place meant for general public, owned or managed by an entity registered as a charitable or religious trust under section 12AA of the Income Tax Act, 1961(hereinafter referred to as the Income Tax Act) or a trust or an institution registered under sub clause (v) of clause (23C) of section 10 of the Income Tax Act or a body or an authority covered under clause (23BBA) of section 10 of the said Income Tax Act;
Provided that nothing contained in entry (b) of this exemption shall apply to:
- i) renting of rooms where charges are Rs 1000 or more per day;
- ii) renting of premises, community halls, kalyanmandapam or open area, and the like where charges are Rs 10000 or more per day;
iii) renting of shops or other spaces for business or commerce where charges are Rs 10000 or more per month.
- Entry No. 80 of Notification No. 12/2017 – Central Tax (Rate) provides the following exemption to an entity registered under section 12AA.
Services by way of training or coaching in recreational activities relating to:
- arts or culture, or
- sports by charitable entities registered under section 12AA of the Income Tax Act.
Thus, services provided by way of training or coaching in recreational activities relating to arts or culture or sports by a charitable entity will be exempt from GST.
- Also as per the entry No. 10 of notification No. 9/2017 integrated tax (Rate) dated 28thJune, 2017, if charitable trusts registered under section 12AA of Income Tax Act receives any services from provider of services located in non-taxable territory, for charitable purposes, such services received are not chargeable to GST under the reverse charge mechanism.
- Services by and to education institutions (including institutions run by charitable trusts)
Entry 66 provides for exemption w.r.t supply by and to educational institutions and only the following services received by eligible educational institution are exempt:
- Transportation of students, faculty and staff of the eligible educational institution.
- Catering service including any mid-day meals scheme sponsored by the Government.
- Security or cleaning or house-keeping services in such educational institutions.
- Services relating to admission to such institution or conduct of examination.
If such school or other educational institution gives property owned by such institution on rent to others, no exemption will be available for such services. Therefore, all services received by educational institutions managed by charitable trusts except those services mentioned above are taxable.
- GST on running of public libraries by charitable trusts
As per entry No. 50 of notification No.12/2017 – Central Tax Rate :
No GST will be applicable if charitable trusts are running public libraries and lend books, other publications or knowledge enhancing content/material from their libraries.
GST on hospital managed by charitable trusts
Entry No. 74 of Notification No. 12/2017 – Central Tax Rate exempts health care services at clinical establishment, an authorised medical professional or paramedics.
Health care services means any service by way of diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognised system of medicines in India and includes services by way of transportation of the patient to and from a clinical establishment, but does not include hair transplant or cosmetic or plastic surgery, except when undertaken to restore or to reconstruct anatomy or functions of body affected due to congenital defects, developmental abnormalities, injury or trauma. Therefore, all treatment or diagnosis or care for illness, injury, deformity, abnormality or pregnancy by a clinical establishment is covered. Such services provided by doctors and paramedics either provided as an employee (clinical establishment) or in their individual capacity is exempt. Transportation of patients to and from a clinical establishment is also exempt. The clinical establishment, as per clause (s), means a hospital, nursing home, clinic, sanatorium or any other institution by, whatever name called, that offers services or facilities requiring diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognised system of medicines in India, or a place established as an independent entity or a part of an establishment to carry out diagnostic or investigative services of diseases.
So, if charitable trusts run a hospital and appoint specialist doctors, nurses and provide medical services to patients at a concessional rate, such services are not liable to GST. If hospitals hire visiting doctors / specialists and these deduct some money from consultation / visit fees payable to doctors and the agreement between hospital and consultant doctors is such that some money is charged for providing services to doctors, there may be GST on such amount deducted from fees paid to doctors.
There is no exemption for supply of goods by charitable trusts. Thus any goods supplied by such charitable trusts for consideration shall be liable to GST.
Services provided to charitable trusts are not out of ambit of GST. All services other than those specifically exempted provided to charitable trusts will be subject to GST.