For Charitable trust 12AA, Goods and Services Tax - GST

[Sanjay Chaturvedi]

Our association is exempted under 12AA we are doctors organize conference for advancement of knowledge. which is covered under B and C below.
(advancement of educational programmes or skill development relating to:

(A) abandoned, orphaned or homeless children;

(B) physically or mentally abused and traumatized persons;

(C) prisoners; or

(D) persons over the age of 65 years residing in a rural area;)

We collect Money for organizing such educational activity as follows -

1) Registration Fees from Doctors

2) Unrestricted Educational Grant from Pharma and Surgical Companies in lieu of providing Space to provide knowledge to the Doctors about their recently launched products.

3) Accompanied person Registration fees

We spent these collection on

1) Venue Arrangement

2) Dinner/Lunch and other activities including entertainment

3) Entertainment of Accompanied person

Please advise do we need to collect GST on all collection or on any of the above collection.

We are Charitable Society registered under 1860.

Posts / Replies

[Alkesh Jani]

Sir,

Notification No.12/2017-Central Tax (Rate) dated 28^th June 2017 exempts services provided by entity registered under Section 12AA of the Income-tax Act, 1961 by way of charitable activities from whole of GST vide entry No. 1 of the notification, which specifies that “services by an entity registered under Section 12AA of Income-tax Act, 1961 by way of charitable activities” are exempt from whole of the GST.

Thus as per this notification, exemption is given to the charitable trusts, only if the following conditions are satisfied.

a) Entities must be registered under Section 12AA of the Income-tax Act, 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- forming substance such as narcotics drugs or alcohol; or

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

(ii) advancement of religion, spirituality or yoga;

(iii) advancement of educational programmes or skill development relating to, -

(A) abandoned, orphaned or homeless children;

(B) physically or mentally abused and traumatized persons;

(C) prisoners; or

(D) persons over the age of 65 years residing in a rural area;

(iv) preservation of environment including 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. The indicative list of such services could be renting of premises by such entities, grant of sponsorship and advertising, rights during conduct of events/functions etc. Since donation is received for participation, it will be considered commercial activity and it will definitely be covered under the GST.

So in my point of view activities mention by you does not fall under the activities mentioned above and GST is applicable. Our experts may correct me if mistaken

[MARIAPPAN GOVINDARAJAN]

I endorse the views of Shri Alkesh Jani.

[Ganeshan Kalyani]

Second point mentioned in your query signifies commercial activity which is not inline with the purpose of the exemption given in the aforesaid notification. Thanks .

[KASTURI SETHI]

Dear Querist,

I concur with the views of the experts. However, you must go through the following circular issued by CBEC:-

GST on Charitable and Religious Trusts

[Sanjay Chaturvedi]

Dear Sir, (Mr. ALKESH JANI)

As I understand that you are not clear about our activity - that I again clarify
1) We are Association of Doctors
2) We are exempt under 12AA

3) We have our annual conference where we discuss and enhance our knowledge - which not limited to physically or mentally abused and traumatized persons; persons over the age of 65 years residing in a rural area but cover these topics too, which are covered in the definition.
Now we receive money from Doctors - members and non members - as Registration fees for covering partial expenditure
We receive unrestricted educational grant from Companies which in turn provides education in the pre defined areas.
We spent on Hotels, for venue and Food
on transportation of delegates
which activity we must charge with GST and which we can leave.
Do we need to pay for GST also or we are exempt?
Mr. Ganeshan Kalyani please tell which activity is not charitable?
Thanks

[KASTURI SETHI]

Unrestricted educational grant from pharma cos. In lieu of providing space tantamounts to " Renting of Immovable Property". It is of commercial nature. Sh.Alkesh Jani has already pointrd out in his reply. Secondly, how you spend does not qualify for exemption. How you collect that is important. Board's circular is crystal clear. Burden of proof is cast upon you to prove that you are entitled to Exemption. By mere registration under Section 12AA of Income Tax Act is not sufficient to claim exemption. Income Tax is direct tax and GST is an indirect tax. So the issue has to be examined in the light of ST Act read with Board's Circular. Despite registration under Section 12AA, there should not be any commercial activity indirectly or directly. All NGOs, Trusts, Temples, Charitable institutions etc are prone to Audit by the department. The terms and conditions of agreement with pharma cos. are very crucial in this aspect.

[Tushar Barad]

We have received financial assistance request from UNRESTRICTED EDUCATION GRANT to support educational preconference workshop organized by XXXX Medical Center Trust hospital which is registered since inception in 2012 with both CIT(Exemptions) Kolkata and CCIT(Exemptions) New Delhi.

They have tax exemption under section 80G as per Income Tax website.

Do they also have to be registered as Charitable Trust Section 12AA?.. as per the question asked above?

We are private company supporting them for carrying out the educational activity, and we are not renting any space, booth or hiring any immovable property from them. In such case : simple agreement as per template provided here : http://www.ebap.org/images/files/4-Template_contract_Unrestricted_Grant_Agreement_and_equipment_LEE.docx ...is sufficient for tax compliance?

Do we as a company,... supporting such educational activity, are entitled to receive certificate of 80G donation? Do the charitable trust liable to report to their IT Circle - about donation received by us with our PAN number to get credit in NSDL portal?

Could you please provide template of agreement between beneficiary and donor?

Thank you very much for your kind reply.