Meaning of Charitable Activity
As per the GST Act, Charitable activities includes, (i) Public health by way of care or counselling of terminally ill persons or persons with severe physical or mental disability, persons afflicted with HIV or AIDS, or persons addicted to a dependence-forming substance such as narcotics, drugs or alcohol; or Public awareness of preventive health, family planning or prevention of HIV infection; (ii) Advancement of religion or spirituality or Yoga; (iii) Advancement of educational programs or skill development relating to, Abandoned, orphaned or homeless children; Physically or mentally abused and traumatized persons; Prisoners; or Persons over the age of 65 years residing in a rural area; and (iv) Preservation of environment including watershed, forests and wildlife.
Let us now delve into the various provisions of GST Act relating to applicability of tax exemptions on various services of charitable entities.
Exemption on Services meant for Advancement of Religion, Spirituality or Yoga
The services provided by entity registered under Section 12AA or 12AB of the Income Tax Act, 1961 by way of advancement of religion, spirituality or yoga are exempt. Fee or consideration charged in any form from the participants for participating in a religious, Yoga or meditation program or camp meant for advancement of religion, spirituality or yoga shall be exempt. Residential programs or camps where the fee charged includes cost of lodging and boarding shall also be exempt as long as the primary activity, objective and purpose of such residential program or camp is advancement of religion, spirituality or yoga.
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. Similarly, activities such as holding of fitness camps or classes such as those in aerobics, dance, music etc. will be taxable.
Services provided by Rehabilitation Professionals recognized by Rehabilitation Council
As per the Notification No. 28/2018-CT(R), dated 31st December 2018, services provided by rehabilitation professionals recognized under the Rehabilitation Council of India Act, 1992 by way of rehabilitation, therapy or counselling and such other activity as covered by the said Act at medical establishments, educational institutions, rehabilitation centres established by Central Government, State Government or Union territory or an entity registered under section 12AA or 12AB of the Income tax Act, 1961 is exempt from GST.
Services provided by Old Age Homes
Services by an old age homes run by Central Government, State Government or entity under section 12AA or 12AB of the Income Tax Act, 1961, to residents for consideration up to Rs.25,000 per month per member is exempted from GST.
Services of conducting Religious Ceremony or Renting of Precincts of Religious Place
Activities exempted from GST are: (a) Conduct of religious ceremony; or (b) Renting of precincts of a religious place meant for general public, owned or managed by Charitable entities registered under section12AA or 12AB 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 0r a body or an authority covered under clause (23BBA) of section 10 of the said Income-tax Act.
If immovable properties owned by charitable trusts like marriage hall, convention hall, rest house for pilgrims, shops situated within the premises of a religious place are rented out, income from letting 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.
Provided that nothing contained in (b) above shall apply to- (i) Renting of rooms where charges are more than Rs.1,000 per day; (ii) Renting of premises, community halls, Kalyan mandap or open area, and the like, where charges are Rs.10, 000 or more per day; (iii) Renting of shops or other spaces for business or commerce, where charges are Rs.10,000 or more per month.
Services by way of Training or Coaching by Charitable Entities
Services by way of training or coaching of Arts or culture, or Sports by charitable entities registered under section 12AA or 12AB of the Income-tax Act are exempt from GST subject to following exceptions.
Exceptions:
- Renting of precincts of religious place for advertisement hoarding.
- Receipt of donation for religious ceremony with specific instruction to advertise the name of the donor.
- Fee from organizing yoga camps or other fitness camps not covered under advancement of religion, spirituality or yoga.
- Donation for organizing fitness camps in reiki, aerobics covered under health and fitness services.
Services by way of Sponsorship of Sporting Events
Services by way of sponsorship of sporting events organized by (a) national sports federation; (b) by Association of Indian Universities, Inter-university Sports Board, School Games Federation of India, All India Sports Council for the Deaf, Paralympic Committee of India or Special Olympics Bharat; (c) by Central Civil Services Cultural and Sports Board; (d) as part of national games, by Indian Olympic Association; or (e) under Panchayat Yuva Kreeda Aur Khel Abhiyaan (PYKKA) Scheme; are exempted from GST.
Services provided by/to Educational Institutions
(A) Services provided by educational institution- (i) to its students, faculty and staff and (ii) by way of conduct of entrance examination against consideration in the form of entrance fee, are exempted from GST.
(B) Services provided to educational institution, by way of- (i) Transportation of students, faculty and staff, up to higher secondary (ii) Catering, including any mid-day meals scheme sponsored by the Government, up to higher secondary (iii) Security or cleaning or house-keeping services performed in such educational institution-up to higher secondary (iv) Services relating to admission or conduct of examination by any educational institution or (v) Supply of online educational journals or periodicals only by degree colleges, are exempted.
Note:
(i) If the catering services, i.e., supply of food or drink in a mess or canteen, is provided by anyone other than the educational institution, then it is a supply of service to the concerned educational institution and attracts GST of 5% without ITC.
(ii) A practicing CMA provided services to CMA Institute by way of teaching to Students is a Taxable supply.
(iii) Industrial training provided by private ITI approved by NCVT on designated trades is exempted from GST. Also, GST is exempted on the service, provided by a private Industrial Training Institute for conduct of examination against consideration in the form of entrance fee and also on the services relating to admission or conduct of examination.
(iv) Maritime Training Institutes of India approved by DG Shipping are educational institutions as per GST Law and the courses conducted by them are exempt from levy of GST.
Services of National Skill Development Corporation (NSDC)
Any services provided by (a) The NSDC set up by GOI; (b) A Sector Skill Council (SSC) approved by NSDC; (c) An Assessment Agency approved by NSDC or SSC; (d) A training partner approved by NSDC or SSC; In relation to- The National Skill Development Programme implemented by NSDC; or A vocational skill development course under the national Skill Certification and Monetary Reward Scheme; or Any other Scheme implemented by NSDC, are exempted from GST.
Services of Deen Dayal Upadhyaya Grameen Kaushalya Yojana
Services provided by training providers (Project implementation agencies) under Deen Dayal Upadhyaya Grameen Kaushalya Yojana under the Ministry of Rural Development by way of offering skill or vocational training courses certified by NCVT are exempt from GST levy.
Health care services by Charitable entities
Recognized systems of medicines: Allopathy, Yoga, Naturopathy, Ayurveda, Homoeopathy, Siddha, and Unani.
Any Diagnosis, treatment or care provided in these systems of medicines are excluded from GST.
| Exempted services under Health care | Taxable services under Health care |
| Services in recognized systems of medicines. Nursing staff, Physiotherapists, Technicians, Lab Assistants, 108 services are exempted. Ambulance services provided by an entity which is not a clinical establishment or an authorized medical practitioner or paramedics would also be exempt from GST. | Hair transplant or cosmetic or plastic surgery, except when undertaken due to congenital defects, developmental abnormalities, injury. Pranic healing treatment, Acupressure treatment, Acupuncture treatment, Reiki treatment, color therapy. |
Services provided by rehabilitation professionals recognized under the Rehabilitation Council of India by way of rehabilitation, therapy or counselling at medical establishments, educational institutions, rehabilitation centers established by Central Government, State Government or Union territory or an entity registered under section 12AA of the Income tax Act, 1961 are exempted from GST.
Note:
(1) Services provided by senior doctors/consultants/technicians hired by the hospitals, whether employees or not, are healthcare services and exempt from GST.
(2) Healthcare services have been defined to mean any service by way of diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognized system of medicines in India.
(3) The entire amount charged by hospitals from the patients, including the retention money and the fee paid to the doctors etc., is towards the healthcare services provided by the hospitals to the patients and is fully exempt.
(4) Food supplied to the in-patients as advised by the doctor/nutritionists is a part of composite supply of healthcare and not taxable. But, other supplies of food by a hospital to patients not admitted or their attendants or visitors are taxable.
Services received from Service Provider located in Non-Taxable Territory
Services received from a provider of service located in a non-taxable territory, by Charitable entities registered under section 12AA or 12AB of the Income-tax Act, 1961 for the purposes of providing charitable activities is exempted from GST.
Follow the Link to access the CBIC circular dated. 11.10.19 relating to GST applicability on donations received by charitable entities-https://cbic-gst.gov.in/pdf/circular-cgst-116.pdf
You may also Like–https://anptaxcorp.com/input-tax-credit-on-goods-sent-for-job-work/
Decoding Tax Audit U/S. 44AB of Income Tax Act: An Ultimate Guide
Composite Supply & Mixed Supply Under GST Act 2017: A Clear Comprehension