Impact of GST on Charitable Trust & Religious Organization
Goods and Service Tax is one single indirect tax system on the supply of goods and services, which will make India one unified common market. GST is applied right from the manufacturers to the end consumer. The tax reform was launched from 1st July 2017 in which the system is divided into CGST, SGST, UTGST and IGST for Central, State and Union Territories levels.
This tax reform has been beneficial for many sectors and industries and also at the same time, the implementation of GST will have social consequences on charitable trusts, religious trusts and NGO’s.
Under GST, charitable foundations and non-profit organizations will come to be liable to pay Goods and Services Tax. This implies GST will be relevant on a portion of the services and products provided by a charitable trust or an NGO. Let us discuss in details for this topic.
Principle to exempt the charitable trust from GST India:
There are sure criteria for a charitable trust or an NGO to be exempted from the Goods and Services Tax. The non-profit organization or NGO must be registered under Section 12AA of the Income Tax Act, and the administrations gave by the non-profit organization or the NGO must be for a charitable cause as mentioned in Notification No. 12/2017-Central tax dated June 28, 2017.
Charitable activity under GST India:
- Services relating to public health like:
- Care or directing of critically ill people or people with extreme physical or mental inability;
- People burdened with HIV or AIDS;
- People dependent on a reliance shaping substance, for example, narcotics drugs or liquor.
- Public awareness of preventive wellbeing, family planning or prevention of HIV disease;
- Headway in religion, spirituality or yoga
- Advancement of instructive projects or skill development identifying with:
- Relinquished, stranded or homeless children;
- Physically or mentally abused and damaged people;
- People beyond 65 year old dwelling in a rural area
- Preservation of environment including watershed, forests and wildlife.
On the off chance that a charitable trust or NGO does not fulfill any of the two conditions, at that point GST would be mandatory and the entity must be registered under GST.
In any case, immovable properties claimed by charitable trusts like marriage corridor, tradition lobby, rest house for pilgrimage, shops arranged inside the premises of a religious place are leased, income from letting out of such property is entirely absolved from GST (as exception is given vide entry no. 13 of Notification No. 12/2017). But if these properties are not situated within the premises of religious place which means within no walls or barrier walls of any religious place, than the income of such letting out will be have the exemption and income from it will be liable to GST.
GST for Educational Institutions and Universities:
While executing GST, services and administrations which relished in exception from service tax were additionally exempted from GST. Subsequently, the services gave by educational institutions to its students, faculty and staff are excluded from GST.
The following services given to the educational institution are excluded from GST India:
- Transportation charges of any students, faculty and workforce.
- Cater the food which includes any mid-day meals scheme provided by the Government.
- Services and administration associated to admissions to or conducting the examination by any institution.
- Security or cleaning or housekeeping administrations performed in such educational institutes and universities.
Under GST, “educational institution” is characterized as an institution giving services by way of:
- Pre-school education and education up to higher secondary school or equivalent.
- Education as a section of a syllabus for obtaining a qualification recognized by any law for the time being in force.
- Education as a part of an officially accepted vocational education course.
Notwithstanding the exemption proceeding from the recent Service Tax regime, income from education is entirely excluded from GST if a charitable trust is running a school, high-school or educational institutional for deserted orphans, abandoned, homeless youngsters, physically or mentally mishandled people, prisoners or people over age of 65 years or above residing in a rural zone.
GST on Training Programs, Camps, and Events:
On the off chance that a charitable trust is directing preparing programs, yoga camps, or different projects that are not free for members, it will be considered as a business activity and thus will be subject for GST. Indeed, even the donation got for such an action will be liable for tax collection under GST.
Services gave by method for coaching or training in recreational activities identifying with arts and culture, or sports by a charitable entity will be absolved from GST.