GST on NGOs, Charitable & Religious Trusts

Goods and Services Tax Act, 2017 covered most of the services within its ambit. However, certain goods and services are provided exemption from the act. Most of these services are in line with the Mega Exemption Notification 2012 that provided exemption in the erstwhile service tax regime. In the GST regime, these exemptions are provided as per Notification No. 12/2017 Central Tax (Rate) dated 28-06-2017 and Notification No. 9/2017 Integrated Tax (Rate) dated 28-06-2017.

One of the peculiar activities exempted from the GST law are certain services provided by NGOs and charitable and religious trusts. However, are all the services provided by such organisations exempt from GST? What are the eligibility criteria to claim exemption from GST law? Find out here!

Eligibility Criteria for Claiming GST Exemption

GST exemption can be availed by the NGOs and charitable and religious trusts subject to the following conditions:

●     Such entities shall be registered under Section 12AA/12AB of the Income Tax Act, 1961, and

●     The activities and services provided by such entities are charitable activities, as listed in the notification.

The term ‘charitable activities’ has been given definite meaning by the GST law to include:

i) public health by way of:

(A) care or counselling 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 the 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 traumatised persons;

(C) prisoners; or

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

iv) preservation of the environment, including watersheds, forests, and wildlife.

The above activities are exempted from the GST by way of charitable activities as listed in the notification. All the other activities undertaken by NGOs and charitable or religious trusts are taxable.

However, certain activities are provided limited exemption from the GST. These include:

1. Hostel accommodation provided to students by the trusts does not fall under the above exemption. However, it is exempted provided the value of supply is up to Rs. 1,000 per day.
2. Religious yatras organised by religious or charitable trusts are not exempt. However, if they are organised by specified organisations facilitated by the Government of India under bilateral arrangements, they are exempted from GST. These organisations include:

●     Kumaon Mandal Vikas Nigam Limited (KMVN), which is a Government of Uttarakhand undertaking, or

●     ‘Haj Committee of India’ or ‘State Haj Committee, including the Joint State Committee.’

3. The advancement of activities relating to yoga has been provided an exemption under GST. Most residential programmes are conducted that include fees for lodging and boarding as well. These shall be exempt only if the primary and predominant activity is yoga, religion, or spirituality. However, activities such as fitness classes and camps, including those of aerobics, music, and dance, shall be taxable.
4. Healthcare services are exempted. These shall also be applicable to the services provided by authorised medical practitioners, paramedics, or clinical establishments of charitable or religious trusts.
5. Coaching and training in recreational activities like arts, culture, and sports provided by charitable organisations are exempt from GST. However, for activities other than arts, culture, and sports, GST shall be applicable. All the forms of art, culture, and sports are provided exemption from GST, including music, dance, painting, literary activities, sculpture making, theatre, etc., of any tradition, language, school, or sports.
6. Conducting of religious ceremonies is also exempted from GST. Religious ceremonies normally include life cycle rituals like special poojas, etc. Also, events like marriage, birth, and death that involve religious ceremonies are exempted from GST.
7. Religious places are usually rented out to the general public at large. This can include halls, rooms, etc. The receipts from renting religious precincts are exempted up to certain limits. Here, the precincts include all the immovable properties of the religious place that are located within the outer boundary walls of the complex where the religious place is located. The exemption can be availed as follows:

●     Renting of rooms where rent should be less than Rs. 1,000 per day.

●     Renting of premises, open area, kalyana mandapam, or community halls, and other similar areas where rent should be less than Rs. 10,000 per day.

●     Renting shops or other similar spaces of commerce or business where consideration should be less than Rs. 10,000 per month.

Key Points

Activities other than religious ceremonies and renting of religious precincts shall be taxable. It shall be noted that certain services provided BY charitable organisations are exempted from GST. However, goods and services provided TO charitable and religious organisations are still taxable unless exempted otherwise.

How can WeP Digital Help with your GST Compliance?

WeP’s GST software is a complete solution for all your GST compliance needs. Understanding the needs of the business owners, the software has been designed to simplify the GST compliances and help business owners focus on more productive tasks. Following are the benefits of WeP GST software:

●     Experienced technical support

●     User-friendly dashboard

●     Multiple report generation to provide deep insights into the transactions

●     99.99% uptime

●     Compatible with all the accounting software and ERPs

●     100+ data validation parameters

●     Invoice generation module, etc.

Whether it's GST return filing, reconciliation, e-way bill generation, e-invoice generation, or any other tasks, GST compliance is no more a mundane process with WeP digital all-in-one GST solution. It’s time for you to use your time productively while the WeP GST solution handles all your GST compliances.