Impact of GST on Charitable or religious entities

1. Requirements to be fulfilled by a charitable trust to be exempted from GST

• Exemption to services rendered by charitable trusts is allowed only if the following two requirements are met:
  • Must be registered under Section 12AA of the Income Tax Act, 1691
  • Should carry out one or more of the specified charitable activities.

2. What are the services provided by a charitable entity that are exempted from GST?

• Services of public health.
• Advancement of religion, spirituality or yoga.
• Advancement of educational programmes or skill development.
• Preservation of environment including watershed, forests and wildlife.
• Recreational training or coaching relating to arts, culture or sports.
• Services of running an old age home.

Note: All the above mentioned services are exempted from GST only if the charitable entity is registered under section 12AA of the Income Tax Act, 1961

3. What are the type of public health services that are exempt when provided by a charitable entity?

• Care or counselling such as
  • Counselling of terminally ill persons or persons with physical or mental disability
  • Counselling for people affected with HIV or AIDS
  • Counselling for alcohol-dependent persons or
• Public awareness of preventive health, prevention of HIV infection

4. Are yoga camps organised by charitable entities taxable?

• No, activities undertaken for the advancement of spirituality or yoga (including meditation) are not taxable as they are covered under the exemption.

5. Are schools or educational institutions run by charitable entities liable to pay GST?

• Services provided by educational institutions to student staff and faculty are exempt from GST irrespective of whether they are run by a charitable institution or not.
• However, the following services if provided by a registered charitable entity are also exempted from GST
  • Educational programmes or skill development relating to,
    1. abandoned, orphaned, or homeless children,
    2. physically or mentally abused and traumatized persons,
    3. prisoners; or
    4. persons over the age of 65 years residing in a rural area will not be liable to pay GST.

6. Will GST be applicable on physical training and other events conducted by a registered charitable trust?

• Activities conducted by a registered charitable entity such as organising fitness classes, aerobics or zumba will be subject to levy of GST.
• Consideration received in any form including donation, for such activities will not be exempted.

7. Are the services provided to a registered charitable entity subject to TDS?

Services provided to a charitable entity even if it is registered under section 12AA of the Income Tax Act, 1961 will be taxable under the GST law, since the same is not covered by any exemption notification.

8. Will the services of displaying the names of the donor in the premises of a registered charitable organisation attract GST?

Such services will not attract GST if the same is not aimed at giving any publicity to the donor by way of promoting or advertising the donor’s business.

9. Should a registered charitable entity charge any GST while giving its premises on rent to any person?

• Services relating to renting of religious precincts owned or managed by a registered charitable entity is not taxable provided the following conditions are satisfied,
  1. The premise given on rent is meant for general public
  2. Rent charged in case of a room does not exceed Rs. 1,000 per day
  3. Rent charged in case of a premise does not exceed Rs. 10,000 per day
  4. Rent charged in case of a shop or an establishment does not exceed Rs. 10,000 per month.
• Note: the above mentioned exemption is applicable, only if the precinct given on rent is located in a religious place, where religious place means a place primarily meant for conduct of prayers, worship etc.

10. Should any GST be charged by a registered charitable entity for renting its shopping complex to any person?

Since the property owned by the registered charitable entity is not a part of a religious place, the same is subject to levy of GST (refer FAQ no 9)

11. Are health care services provided by a charitable institution exempted from GST?

• Healthcare services provided by a clinical establishments and authorised medical practitioners are exempted from GST irrespective of whether the same is managed by a registered charitable entity or not.
• However, healthcare services do not include cosmetic or plastic surgery other than plastic surgery undertaken to correct congenital defects or restore body functions affected due to an accident or trauma.

12. Are the services provided by public libraries run by registered charitable trusts liable to GST?

• No, any income derived from operating public libraries, lending books, or selling any other knowledge enhancing content or material through the public libraries has been expressly exempted from GST even if not owned by a charitable entity.
• Since it is a blanket exemption give to all the public libraries, GST will not be applicable if the same is owned or managed by charitable trusts.

13. Will services relating to organisation of religious pilgrimages by a registered charitable entity attract GST?

• Services relating to organisation of religious pilgrimages will not attract any GST provided the same is organised by those organisations that are notified by the government in this regard.
• At present, the only notified organisations for carrying out religious pilgrimages without charging any GST are,
  • The Haj Committee and
  • Kumaon Mandal Vikas Nigam Limited

14. Import of services by a registered charitable entity:

• Usually, when a taxable service is provided to a person located in a taxable territory by a service provider in a non-taxable territory, GST will have to be paid by the service recipient under reverse charge basis.
• However, if the same is received by a charitable entity registered under section 12AA of the Income Tax Act, 1961, no GST needs to be paid under RCM because the same is exempt.

15. Will the amount received for conducting religious ceremonies attract GST?

No, any amount which is received for services relating to conducting any religious activities including any Poojas conducted during the event of birth, death or any ceremonies, irrespective of the religion, is exempt from GST