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GST on Trust - GST on Charitable and Religious Societies/Trusts
Ever since the emergence of goods and services tax law in the country, people have been advocating on impacts of the indirect tax on charitable Institutions and religious trusts. Not all the services offered by these institutions are exempted from GST. In fact, as per the provisions laid down by the GST Council, a number of services provided by Charitable and religious trusts are under the ambit of goods and services tax.
What are charitable activities?
CBEC (Central Board of Excise and Customs) has explained the provisions on the applicability of Goods and Services Tax on Charitable and religious trusts, as registered under section 12AA of Income Tax, 1961. It is mentioned in the notification no. 12/2017- Central Tax
Charitable activities have been defined under that notification. 'Charitable activities’ means the activities relating to:
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Public health by way of
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Care and counseling of
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Terminally ill persons or persons with severe physical or mental disability;
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Persons inflicted with HIV or AIDS;
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Person addicted to a dependence forming substance such as narcotics, drugs or alcohol; or
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Public awareness of preventive health, family planning or prevention of HIV infection;
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Advancement of religion, spirituality of yoga
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Advancement of education programs or skill development relating to,-
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Abandoned, orphaned or homeless children
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Physically or mentally abused and traumatized persons
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Prisoner, or
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Persons over the age of 65 years residing in rural areas.
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Preservation of environment including watershed, forests, and wildlife.
Exempted from the GST
A few of the services offered by charitable Institutions and religious trusts are exempted from the GST as per the notification. Let us have a look of exemptions from the single taxation system:
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Immovable properties which are owned by Charitable Trusts such as conventional halls, rest house for pilgrims, shops and other such bodies located within the premises of any religious place and boundary are not subjected to the goods and services tax
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Income from a religious ceremony that has been organized by a charitable institution is exempted as per entry number 13 of the notification. Income will be subjected to GST if it loses the religious nature of the same.
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Charitable Trust who provide the facilities of running public libraries and lend books and the materials which enhance knowledge and information from their libraries are not under the ambit of GST.
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As per the entry number 74 of the notification number 12/2017, Healthcare services at clinics and authorized medical profession are totally exempted from the GST. It is important to note that health care services do not include hair transplant or plastic surgery; they are subjected to the taxation system.
Subjected to the GST
As per explanation made by the Central Board of Excise and Customs by notification no. 12/2017, it has been made clear by the government that charitable activities, as defined shall be exempted from the GST. However, not all the charitable activities offered by charitable Institutions and religious trust are exempted from the law. Most of the services and activities are subjected to the GST.
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Renting of premises, granting rights to advertising during a program or granting sponsorship are not covered under the definition of charitable activities hands. This is why; they will be liable for the Indirect Tax.
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If a charitable trust is arranging residential or non-residential yoga camp by getting the donation or other such charges in any name from the participators, it will be subjected to the GST as these will not be defined as charitable activities.
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Any school run by a trust for the practices which include non-charitable activities are not exempted from Goods and Services Tax law and will be subject to pay tax for the same.
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Any supply of goods and services by charitable of religious Institutions will be taxable under the GST law, as per the notification.
Conclusion
The government has rightly introduced the scheme of defining charitable activities under the notification. There are a number of instances wherein the name of charitable activities these institutions and trusts were running covered scams which nobody questioned. Also, Corporate used to apply the same tactic for saving their tax and maintain the stability of being immune to the taxation system. The government has introduced the authenticity and legitimacy in the charitable
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