The GST & Indirect Taxes Committee of the Institute of Chartered Accountants of India (ICAI) has released the 𝗚𝗦𝗧 𝗦𝗲𝗰𝘁𝗼𝗿𝗮𝗹 𝗚𝘂𝗶𝗱𝗲 𝗼𝗻 𝗖𝗵𝗮𝗿𝗶𝘁𝗮𝗯𝗹𝗲 𝗧𝗿𝘂𝘀𝘁𝘀 & 𝗡𝗣𝗢𝘀, marking the first publication under its Industry-Specific GST Publication Series. The Guide provides practical insights into the GST implications applicable to charitable trusts, societies, Section 8 companies, NGOs, trustees, professionals and other stakeholders.
𝗞𝗲𝘆 𝗛𝗶𝗴𝗵𝗹𝗶𝗴𝗵𝘁𝘀
Income-tax registration does not automatically grant GST exemption.Registration under Sections 12AA/12AB of the Income-tax Act only establishes charitable status for income-tax purposes. Under GST, exemption depends upon the nature of each individual supply and the availability of a specific exemption under the GST law.
Every receipt requires separate GST evaluation.
A charitable organisation may simultaneously have:
- GST-exempt supplies
- Taxable supplies
- Receipts outside the scope of GSTAccordingly, each transaction should be examined independently.
𝗗𝗼𝗻𝗮𝘁𝗶𝗼𝗻𝘀 𝗮𝗻𝗱 𝗚𝗿𝗮𝗻𝘁𝘀
Voluntary donations, corpus contributions and unconditional grants, where no benefit is provided to the donor, generally do not constitute consideration and may remain outside the scope of GST.
However, where donors receive identifiable benefits such as:
- Naming rights;
- Sponsorship benefits;
- Brand visibility;
- Event participation;
- Publicity or promotional benefits the amount received may qualify as consideration for a taxable supply u/s 7 of the CGST Act, 2017
𝗡𝗼𝗻-𝗣𝗿𝗼𝗳𝗶𝘁 ≠ 𝗡𝗼𝗻-𝗧𝗮𝘅𝗮𝗯𝗹𝗲
One of the Guide’s significant clarifications is that the GST definition of “Business” is very wide and includes activities undertaken whether or not for pecuniary benefit.
𝗠𝗮𝗷𝗼𝗿 𝗔𝗿𝗲𝗮𝘀 𝗖𝗼𝘃𝗲𝗿𝗲𝗱
The Guide discusses GST implications relating to:
- Corpus donations;
- Government grants
- CSR funds;
- Membership subscriptions;
- Educational & training fees;
- Hostel receipts;
- Healthcare services;
- Rental income;
- Religious activities;
- Sale of books/publications;
- Foreign contributions;
- Environmental activities; Yoga & spiritual programmes
𝗥𝗲𝗴𝗶𝘀𝘁𝗿𝗮𝘁𝗶𝗼𝗻, 𝗥𝗖𝗠 & 𝗜𝗧𝗖
The publication also provides detailed guidance on:
- GST registration thresholds
- Aggregate turnover computation
- Reverse Charge Mechanism (RCM) on services such as: Legal services; GTA services; • Sponsorship; • Security services; • Renting of immovable property (specified cases)
- GST on digital services
- Availability and reversal of Input Tax Credit (ITC) where both taxable and exempt activities are undertaken.
