Criteria for Charitable Trust to Be Exempt from GST. To be exempt from GST, a charitable trust or NGO must satisfy the criteria

1. GST – Impact on
Charitable Trusts
Prepared By :-
Mahesh Madhukar Gaonkar

2. Bringing Charitable Trust under GST
(Overview)
2
Person
under
GST
Taxable and
exempted
activities
Model
based
treatment
Activities
taxable
Registration
Charitable Trust
being a legal person is
included under the
definition of “person“
under GST
Since Charitable Trust
is included in the
definition of “person“,
activities of Trust
becomes taxable
Charitable Trust liable to
be registered if aggregate
turnover in a financial
year exceeds INR. 40
lakhs
Apart from specific
exempted supply made
by a Charitable Trust, all
other activities would be
taxable under GST
The models in which a
Charitable Trust functions
and carries out its
activities would also play
a key role in determining
tax treatment

3. Supply
Place of Supply
ValuationTime of Supply
Compliance
Aju
Input Tax
Credit
Key Components of GST

4. Supply Under GST
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5. Supply u/s 7(1) of CGST Act
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Sec. 7(1)(a) Sec. 7(1)(b) Sec. 7(1)(c)
Sale, transfer,
barter, exchange,
license, rental,
lease, disposal
made or agreed
to be made
For consideration*
In the course of
furtherance of
business
Importation of services
For consideration*
Whether or not in the
course of furtherance
of business
Activities specified in
Schedule - I
Without consideration
All forms of supply of Goods or Services or both
Excludes Supply u/s 7(2):
 Activities specified in
Schedule – III
 Notified supplies made
by CG / SG / Local
Authority as public
authority
*Consideration includes consideration in kind also.

6. Goods defined u/s 2 (52)
 Every kind of movable property
 Other than:
• Money [Sec. 2(75)]
• Securities [Sec. 2(101)]
 But includes
• Actionable claim [sec 2(1)];
• Growing crops, grass and things attached to or forming part of the land which are
agreed to be severed before supply or under a contract of supply.
 In addition to above, Schedule II deems certain supply to be that of goods
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Clause 6 of Schedule III:
Actionable claims other than lottery,
betting and gambling are neither to
treated as supply or nor supply of
survice

7. Service defined u/s 2 (102)
 Service means anything other than
• Goods
• Money
• Security
 Includes
• Activities relating to the use of money; or
• Its conveyance by cash or by any other mode, from one form, currency or denomination, to
another form, currency or denomination for which a separate consideration is charged
• An explanation to be inserted in definition of ‘services’ to be clarified that services includes
facilitating or arranging transaction in securities.
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8. Maharashtra Maharashtra
Person 2 –
Place of Supply
Person 1 –
Location of Supplier
Goods and Services
Taxing Authority
Jurisdiction
Place of Consumption :
also termed as -
Place of Supply
GST Scenario
Intrastate
Transaction Value 10,000
CGST 2.5% 250
SGST 2.5% 250
Total Value 10,500
Total Tax 500
“fixed establishment” means a
place, other than the place of
business, which is characterized
by a sufficient degree of
permanence and suitable structure
in terms of human and technical
resources to supply services, or to
receive and use services for its
own needs
What is
consumption
based tax?
Place of Supply – Intrastate Supply
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9. Maharashtra Gujarat
Person 2 –
Place of Supply
Person 1 –
Location of Supplier
Goods and Services Taxing Authority
Jurisdiction
Place of Consumption :
also termed as -
Place of Supply
GST Scenario
Interstate
Transaction Value 10,000
IGST 5% 500
Value 10,500
Total Value 10,500
Total Tax 500
Place of Supply – Interstate Supply What is
consumption
based tax?
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10. Forward Charge
Events Remarks
If invoice is issued in a Prescribed time then,
Time of Supply will be earliest of-
• Date of Invoice or
• Date of Payment
• Invoice Timing (within 30 Days)
• Continuous Supply
• Time Based
• Event Based
Delay in Invoicing then,
Time of Supply will be earliest of-
• Date of Payment or
• Date of Completion of Service
Sn Event Time Period
1 Taxable supply of services 30 Days from Supply of Service
2 Continuous supply of services 30 Days on completion of each
milestone.
3 Supply of service by a banking
company or FI including NBFC
45 Days from Supply of Service
4 Taxable supply of goods Before or at the time of supply to the
recipient
Time of Supply
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11. Reverse Charge
Events- Earliest of Remarks
The date on which the payment is made • Old Concept
31st day from the date of issuance of invoice by Goods
provider
61st day from the date of issuance of invoice by service
provider
• Deemed Due date
Where it is not possible to determine the time of supply under above clauses then the time of supply shall be -
Date of entry in the books of accounts of the recipient.
Same provision is applicable in case of import of service where the service provider is an associate enterprise.
Time of Supply
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12. Business Under GST
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13. Business u/s 2(17) of CGST Act, 2017
• Whether Or Not For Pecuniary Benefit And Irrespective Of Volume, Frequency, Continuity Or
Regularity Of Following:
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• Supply / acquisition or goods (including capital assets) and services in connection commencement or
closure of business
• Provision of facilities / benefits to its members by:
Club
Association For subscription /
Society other consideration
Or any such body

14. 14
 Business includes– [section 2(17) of CGST Act)]:
• Admission of person(s) to any premises for consideration
• Services supplied by a person as the holder of an office which has been
accepted by him in the course or furtherance of his trade, commerce or
vocation
• Activities of a race club including by way of totalisator or a license to
book maker or activities of a licensed book maker in such club
• Any activity undertaken by CG or SG or local authority in which they are
engaged as public authorities

15. Reverse Charge
 Section 2(98) Reverse Charge means:
▰ the liability to pay tax by the recipient of supply of goods or services or
both instead of the supplier of such goods or services or both under
Section 9(3) relating to Reverse Charge Mechanism for specified services
Section 9(4) relating to Unregistered Dealers: (Deferred till 30th September, 2018
vide Notification No. CTR 22/2018), or under Section 5(3) and 5(4) of the Integrated
Goods and Services Tax Act;
• Earlier applicable to all, but now as per notifications to be issued, a specify a class of
registered persons who shall, in respect of supply of specified categories of goods or services
or both received from an unregistered supplier, pay the tax on RCM basis.
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16. S/ No. Description of supply of Service Supplier of service Recipient of service
1. Any service supplied by any person who is
located in a non-taxable territory to any person
other than non-taxable online recipient.
Any person located in a non-
taxable territory
Any person located in the
taxable territory other than
non-taxable online recipient
2. GTA Services Goods Transport Agency
(GTA) who has not paid
integrated tax at the rate of
12%
Any factory, society,
cooperative society, registered
person, body corporate,
partnership firm, casual
taxable person; located in the
taxable territory
3. Legal Services by advocate An individual advocate
including a senior advocate or
firm of advocates
Any business entity located in
the taxable territory
4. Services supplied by an arbitral tribunal to a
business entity
An arbitral tribunal Any business entity located in
the taxable territory
5. Services provided by way of sponsorship to any
body corporate or partnership firm
Any person Any body corporate or
partnership firm located in the
taxable territory

17. 6. Services supplied by the Central Government,
State Government, Union territory or local
authority to a business entity excluding, -
(1) renting of immovable property, and (2) services
specified below- (i) services by the Department of
Posts by way of speed post, express parcel post,
life insurance, and agency services provided to a
person other than Central Government, State
Government or Union territory or local authority;
(ii) services in relation to an aircraft or a vessel,
inside or outside the precincts of a port or an
airport; (iii) transport of goods or passengers
Central Government, State
Government, Union
territory or local authority
Any business entity located in the taxable territory
7. Services supplied by a director of a company or a
body corporate to the said company or the body
corporate
A director of a company or
a body corporate
The company or a body corporate located in the taxable
territory
8. Services supplied by an insurance agent to any
person carrying on insurance business
An insurance agent Any person carrying on insurance business, located in the
taxable territory
9. Services supplied by a recovery agent to a banking
company or a financial institution or a non-
banking financial company
A recovery agent A banking company or a financial institution or a non-
banking financial company, located in the taxable territory

18. 10 Services supplied by a person located in non-
taxable territory by way of transportation of
goods by a vessel from a place outside India up
to the customs station of clearance in India
A person located in
non-taxable territory
Importer, as defined in clause (26) of
section 2 of the Customs Act,
1962(52 of 1962), located in the
taxable territory
11 Supply of services by an author, music composer,
photographer, artist or the like by way of transfer or
permitting the use or enjoyment of a copyright covered
under section 13(1) (a) of the Copyright Act, 1957 relating to
original literary, dramatic, musical or artistic works to a
publisher, music company, producer or the like
Author or music composer,
photograph her, artist, or the
like
Publisher, music company, producer or the like,
located in the taxable territory
12 Supply of services by the members of Overseeing
Committee to Reserve Bank of India
Members of Overseeing
Committee constituted by
the Reserve Bank of India
Reserve Bank of India.
13. * Security services (services
provided by way of supply of security
personnel) provided to a registered person
Any person other than
a
body corporate
A registered person,
located in the taxable
territory.”;
As per Notification No. 29/2018- Central Tax (Rate) dated 31st December, 2018 effective from 1st day of Jan 2019.

19. Exemptions to Charitable Trusts
under GST
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20. General Exemptions to Charitable Trusts
under GST
 To be exempt under GST, a Charitable Trust or NGO must satisfy the following two
criteria:
 The entity must be registered under Section 12 AA of the Income Tax Act,
1961;
 The services provided by the entity must be a charitable activity.
 Only the following activities under GST are to be considered as “Charitable
activities”
Public Health by way of ,-
 care or counseling of terminally ill persons or persons with severe physical or
mental disability,
 persons addicted to a dependence-forming substance such as narcotics
drugs or alcohol; 20

21. 21
Advancement Of Religion , Spirituality Or Yoga;
Advancement Of Educational Programs Or Skill
Development Relating To,
 Abandoned, Orphaned Or Homeless Children;
 Physically Or Mentally Abused And Traumatized Persons;
 Persons Over The Age Of 65 Years Residing In A Rural Area;

22. Entry No. 10 of Notification No. 9/2017-
Integrated Tax (Rate) dated 28.06.2017
 Charitable Trust Registered Under Section 12AA Of The
Income Tax Act, 1961 Is Not Required To Pay IGST Under
Reverse Charge For Any Service Received By It From A
Provider Of Service Located In Non-taxable Territory For
Charitable Purpose.
 If Such Services Are Procured For Other Than Charitable
Purpose, Then Igst Is Payable Under Reverse Charge.
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23. Entry No. 17 of Notification No.12/2017
Dated 28.06.2017
• Service of transportation of passengers, with or without accompanied
belongings, by—
• (i) railways in a class other than—
• (A) first class; or
• (B) an air-conditioned coach;
• (ii) metro, monorail or tramway;
• (iii) inland waterways;
• (iv) public transport, other than predominantly for tourism purpose, in a vessel
between places located in India; and
• (v) metered cabs or auto rickshaws (including E-rickshaws);
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24. Entry No. 74 of Notification No.12/2017
Dated 28.06.2017
• Services by way of-
i. Health care services by a clinical establishment, an authorised medical
ii. practitioner or para-medics;
iii. Services provided by way of transportation of a patient in an ambulance,
iv. other than those specified in (i) above;
“Health care services” means any service by way of diagnosis or treatment or care for illness,
injury, deformity, abnormality or pregnancy in any recognised system of medicines in India and
includes services by way of transportation 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 or functions of body affected due to congenital defects, developmental
abnormalities, injury or trauma;
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25. Entry No. 77 of Notification No.12/2017
Dated 28.06.2017
• Service by an unincorporated body or a non- profit entity registered
under any law for the time being in force, to its own members by way of
reimbursement of charges or share of contribution -
 (a) as a trade union;
 (b) for the provision of carrying out any activity which is exempt from the levy of
GST; or
 (c) up to an amount of Rs. 7,500/- per month per member for sourcing of
goods or services from a third person for the common use of its members in a
housing society or a residential complex;
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26. Entry No. 81 of Notification No.12/2017
Dated 28.06.2017
• Services by way of right to admission to, -
i. circus, dance, or theatrical performance including drama or ballet;
ii. award function, concert, pageant, musical performance or any sporting
event other than a recognized sporting event;
iii. recognized sporting event;
• where the consideration for admission is not more than Rs 500 per person in (i),
(ii) and (iii) above.
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27. Exemptions for Conduct of religious
ceremony
Entry No. 13 Of Notification No. 12/2017-central Tax (Rate), Dated 28th June,
2017 [Clause (A)]
 The Activity Of Conducting Any Religious Ceremony Is Exempt Under GST.
 The Exemption Is Available Provided The Entity Is Registered Under Section 12AA Of
The Income Tax Act, 1961.
 Any Income By A Charitable Or Religious Trust For Conducting A Religious Function
Would Not Be Liable To GST.
 All Income From Religious Ceremony Is Not Exempt. Services Other Than By Way Of
Conduct Of Religious Ceremony Are Not Exempt.
 The Income Of Any Other Nature Like Getting Advertisement Charges For Allowing To Put
Up The Hoarding Even During Conduct Of Such Religious Function/Pujas Would Be
Taxable Under Gst. 27

28. Selling of space for Advertisement
in Print Media
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• "Print media" for the purpose of section 65 (105) (zzzm), means,-
(i) "newspaper" as defined in sub-section (1) of section 1 of the Press and
Registration of Books Act, 1867 (25 of 1867)
(ii) "book" as defined in sub section (1) of section 1 of the Press and
Registration of Books Act, 1867 (25 of 1867) but does not include
business directories, yellow pages, and trade catalogues which are
primarily meant for commercial purposes.
• Books includes souvenirs.

29. Let Us Test Our Understanding:
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A trust registered under section 12AA of the IT Act organizes a hawan puja and invites members from all over India to attend
the same. The entire finance of the same is managed by the trust and in the process, the trust earns revenue of INR 25,00,000/-
by way of contributions from It’s members. What would be the GST implication of the same?
The income would be exempt from GST as the exemption benefit has been allowed to any entity conducting a religious
ceremony
What would be the GST implication if an AOP (not registered under section 12AA of the IT Act) organizes the above
function?
The income would be exempt from GST as the exemption benefit has been allowed to any entity conducting a religious ceremony

30. Exemptions for Renting of religious place meant
for general public
Entry No. 13 of Notification No. 12/2017-Central Tax (Rate), dated 28th June, 2017
[Clause (b)].
 Renting Of Rooms Where Charges Are One Thousand Rupees Or More Per Day;
 Renting Of Premises, Community Halls, Open Vacant Area, And The Like Where
Charges Are INR 10,000 Or More Per Day;
 Renting Of Shops Or Other Spaces For Business Or Commerce Where Charges Are
INR 10,000 Or More Per Month.
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31. Exemptions For Training And Coaching In
Recreational Activities
Entry No. 80 of Notification No. 12/2017-Central Tax (Rate), dated 28th
June, 2017.
 Services by way of training or coaching in recreational activities relating to –
(a) arts or culture, or
(b) sports by charitable entities registered under Section 12AA of the Income Tax Act,1961
Explanation:
 For getting exemption for training and coaching on arts or culture, the person is not required
to be registered under Section 12AA of the Income Tax Act, 1961;
 For getting exemption for training or coaching in recreational activities relating to sports,
registration under Section 12AA of the Income Tax Act, 1961 is must.
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32. Exemptions For Specific Activities
 Charitable Trust Running Public Libraries
Entry No. 50 Of Notification No. 12/2017-central Tax (Rate), Dated 28.06.2017
Services Of Public Libraries By Way Of Lending Of Books, Publications Or Any Other
Knowledge Enhancing Content Or Material Have Been Made Exempt.
 Charitable Trust Supplying Goods
There Is No Exemption For Supply Of Goods By A Charitable Trust. Thus Any Goods
Supplied By A Charitable Trust For Consideration Shall Be Leviable To GST
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33. Exemption applicable to Motor Vehicles for
Transport – Notification No. 2/2018- 25.01.2018
• Motor vehicle for transport of Students, faculty and staff, to
a person providing services of transportation of students,
faculty and staff to an educational institution providing
services by way of pre-school education and education up
to higher secondary school or equivalent.”
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