GST ON NGO

GST on NGO:

What is NGO:

In India, there are mainly the three types of non-profit organizations i.e. Section 8 Companies (earlier Section 25): Societies registered under section 20 of the Societies Registration Act 1860. Trusts formed under Indian Trusts Act 1882.

GST Notification No. 12/2017-Central Tax - Sl. No. 1, 13 & 80:

Serial No. 1, 13 & 80 of GST Notification No. 12/2017 of Central Tax dated 28th June 2017 specifies exemptions for the notified services supplied by charitable and religious trusts:

Sl No. 1 of GST Notification No. 12/2017:

Sl No 1 of GST Notification No. 12/2007 specifies that services by an tnitity registered under Section 12AA of the Income-tax Act, 1961 by way of charitable activities are exempt from whole of hte GST.

Charitable Activities:

Charitable activities has been defined in the notification as under: Charitable activities means activities relating to:

  • 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 forming substance such as narcotics drugs or alcohol; or

    (B) public awareness of preventive health, family planning or prevention of HIV infection;

  • Advancement of religion, spirituality or yoga;

  • Advancement of educational programmes or skill development relating to:

    (A) abandoned, orphaned or homeless children;
    (B) physically or mentally abused and traumatized perosns;
    (C) prisoners; or
    (D) persons over the age of 65 years residing in a rural area;

  • preservation of environment including watershed, forests and wildlife.

The services supplied by charitable trusts are exempt from GST only if following conditions are satisfied:

  • Enities are registered under Section 12AA of the Income Tax Act, and

  • Services or activities by the entity are by way of charitable activities as listed in the notification.

There could be many services provided by charitable and religious trusts which are not covered by the definition of charitable activities as given in the notification. Such services would attract GST. For instance, services of transportation of passengers for a pilgrimage or grant of advertising rights to a person on the premises of the charitable or religious trust or on publications of the trust or granting admission to events, functions, celebrations, shows against admission fee or ticket would be leviable to GST.

Sl No. 13 of GST Notification No. 12/2017:

This notification exempts services supplied 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 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 the exemption shall not apply to the following:

    (A) renting of rooms where charges are one thousand rupees or more per day;
    (B) renting of premises, community halls, kalyanmandapam or open area, and the like where charges are ten thousand rupees or more per day;
    (C) renting of shops or other spaces for business or commerce where charges are ten thousand rupees or more per month.

Thus the amount charged, by whatever name called, for the conduct of any religious ceremony is exempt from GST. The exemption is applicable to conduct of religious ceremonies of all religions. Services other than by way of conduct of any religious ceremony such as granting rights to collect parking fee in the parking lot of the trust or granting photography rights in the premises against a fee or allowing advertisements on the premises of the religious place or in the publications of the trust shal be leviable to GST.

Religious Place: Religious place means a place which is primarily meant for conduct of prayers or worship pertaining to a religion, meditation, or spirituality. The exemption is applicable to renting of precincts o religious places of all religions. Activities other than conduct of religious ceremony and renting of precincts will be taxable irrespective of the manner or the name in which the consideration is received.

For example, if donation is received with specific instructions or mutual understanding between the donor and the receiver that religious place will host an advertisement promoting business of the donor, such donation will be subject to GST. But if the donation is received without such instructions or without a quid pro quo in the form of supply of any goods or services by the trust to the donor, it shalll not be subject to GST.

Sl No. 80 of GST Notification No. 12/2017:

This notification entry exempts 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 such as dance, music, painting, literary activities, drama of any school, tradition or language or any of the sports by a charitable entity will be exempt from GST.

GST on Management of Educational Insitutions by NGOs:

Activities of schools, colleges or any other educational institutions run by charitable trusts by way of education or skill devlopment of abandoned, orphans, homeless children, physicall or mentally abused persons, prisoners or persons over age of 65 years or above residing in a rural area, shall be considered as charitable activities exempt from GST.

Rural Area is the area comprised in a village as defined in land revenue records excluding the area under any municipal committee, municipal corporation, town area committee, cantonment board or notified area committe or any area that may be notified as an urgan are by the Central Government or a State Government.

Import of Services by NGOs:

Any services received by charitable trusts registered under Section 12AA of the Income Tax Act from a provider of services located outside India, for purpose of providing charitable activities are exempt from GST. However, this exemption shall not apply to online information and databae access or retrieval (OIDAR) services received by charitable trusts.

Services by and to Educational Institutions:

Activities of a school, college or an institution run by a trust which do not come within the ambit of charitable activities as defined in the notification will not be exempt under Sl No. 1 of Notification No. 12/2017. However, such activities may be exempt under Sl No. 66 of the said Notification provided the school, college or institution is an educational institution as defined in clause (y) of said notification sl no. 66, which exempts services provided by an educational institution to its students, faculty and staff. It also exempts services supplied to an educational institution providing pre-school education and education up to higher secondary school or equivalent, by way of:

  • 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 institution;

  • services relating to admission to such institution or conduct of examination.

Educational institution has been defined as an institution providing services by way of:

  • pre-school education and education up to higher secondary school or equivalent;

  • education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force;

  • education as a part of an approved vocational educational course.

However, it may be noted that only such services as provided by an educational institution to its students, faculty and staff are exempt. Services provided to others such as renting of property ie. renting of book shops, canteen premises in school, renting of premises for holding a competitive examinination will be leviyable to GST.

Yoga & Meditation camp by NGOs:

Services provided by an entity registered under Section 12AA of the Income Tax Act by way of advancement of religion, spirituality or yoga are exempt. Fee or consideration charged in any other form from the participants for participating in a religious, Yoga or meditation programme or camp meant for advancement of religion, spirituality or yoga shall be exempt. However, if charitable or religious trusts merely or primarily provide accommodation or serve food and drinks against consideration in any form including donation, such activities will be taxable. Similary, activities such as holding of fitness camps or classes such as those in aerobics, dance, music will be taxable.

Arranging Yatras to different places by NGOs:

The services of religious piligrimage as are provided by Kumaon Mandal Vikas Nigam Ltd or Haj Committee of India or a State Haj Committee constituted under the Haj Committee Act, 2002 in respect of a religious piligrimage facilitated by the Government of India under bilateral arrangement are exempt from GST. Note that religious yatras or piligrimage organised by any charitable or religious trust are not exempt.

Public Libraries by NGOs:

GST is not applicable on activities of public libraries including those run by charitable or religious trusts by way of lending books, other publications or knowledge enhancing content or meterial. This activity has been specifically exempted by entry No. 50 of Notification No. 12/2017.

Hospital managed by NGOs:

As per entry no. 74 of Notification No. 12/2017, healthcare services by a clinical establishment, an authorised medical professional or paramedics and services provided by way of transporation of a patient in an ambulance are exempt.

Health Care Services: Health care services means any service by way of diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any reconginsed system of medicines in India and includes services by way of transporation 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 of functions of body affected due to congenital defects, developmental abnormalities, injury or trauma.

Clinical Establishment: Clinical establishment means a hospital, nursing home, clinic, sanatorium or any other institution by whatever namy 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 investigaive services of diseases.

GST on services provided to NGOs:

Services provided to charitable or religious trusts are not outside the perview of GST unless specifically exempted. All goods and services supplied to charitable or religious trust are leviable to GST.

GST on supply of goods by NGOs:

All goods, other than those specifically exempt, supplied by any charitable or religious trust against consideration in any form including donation are liable to GST.

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