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GST on Charitable and Religious Trusts

Goods and Services Tax - GST Law and Procedure - 82 - The provisions relating to taxation of activities of charitable institutions and religious trusts have been borrowed and carried over from the erstwhile service tax provisions. All services provided by such entities are not exempt. In fact, there are many services that are provided by such entities which would be within the ambit of GST. Notification No.12/2017-Central Tax (Rate) dated 28th June 2017 exempts services provided by entity regist .....

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and (b) 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 means activities relating to: (i) public health by way of: (A) care or counseling 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-for .....

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ing watershed, forests and wildlife. This notification makes the exemption to charitable trusts available for charitable activities more specific. While the income from only those activities listed above is exempt from GST, income from the activities other than those mentioned above is taxable. Thus, there could be many services provided by charitable and religious trust which are not considered as charitable activities and hence, such services come under the GST net. The indicative list of such .....

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tered under Section 12AA of the Income Tax Act: Services by a person by way of: (a) conduct of any religious ceremony; (b) 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 .....

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w gives a limited exemption to renting of only religious precincts or a religious place meant for general public by the entity registered under Section 12AA of the Income Tax Act. As per clause (zc) of the said notification, the term general public means the body of people at large sufficiently defined by some common quality of public or impersonal nature . The term religious place as per the clause (zy) of the said notification means a place which is primarily meant for conduct of prayers or wo .....

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out of such property is wholly exempt from GST. But if such properties are not situated in the precincts of a religious place meaning thereby not within walls or boundary walls of the religious place, income from such letting out will lose this exemption and income from it will be liable to GST. Income from a religious ceremony organised by a charitable trust is exempt as per the above notification. So the income from Navratri functions,other religious functions, and religious poojas conducted o .....

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eable to GST. For example, if with regard to Ganeshutsav or other religious functions, charitable trusts rent out their space to agencies for advertisement hoardings, income from such advertisement is chargeable to GST, as this will be considered as income from the advertisement services. Further, if donation for religious ceremony is received with specific instructions to advertise the name of a donor, such donation income will be subject to GST. But if donation for religious ceremony is receiv .....

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culture or sports by a charitable entity will be exempt from GST. GST on management of educational institutions by charitable trusts If trusts are running schools, colleges or any other educational institutions specifically for abandoned, orphans, homeless children, physically or mentally abused persons, prisoners or persons over age of 65 years or above residing in a rural area, such activities will be considered as charitable activities and income from such supplies will be wholly exempt from .....

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7, 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) If the trust is running school for the purpose which is not covered above (i.e. not coming within the scope of charitable activities as defined .....

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ing service including any mid-day meals scheme sponsored by the Government. (3) Security or cleaning or house-keeping services in such educational institution. (4) 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 (for other .....

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ll not be considered charitable activities (as it is different from advancement of religion , spirituality or yoga). Since donation is received for participation, it will be considered commercial activity and it will definitely be covered under the GST. Similarly, if charitable trusts organise fitness camps in reiki, aerobics, etc., and receive donation from participants, such income that comes under health and fitness services and will also be taxable. GST on running of public libraries by char .....

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, informational and recreational needs of its users and finance for such libraries can be provided from donation, subscription, from special fund created for this purpose or from combination of all such sources, it will be called public library and no GST will be applicable on such services. GST on hospital managed by charitable trusts Entry no. 74 of Notification No. 12/2017-Central Tax Rate (applicable to all persons including charitable trusts) exempts healthcare services at clinical establis .....

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