In this article, we will discuss tax-ability of Charitable and religious trusts under GST regime.
Under the GST regime, the provisions relating to taxation on activities of NGOs, charitable and religious trusts have been taken from the service tax provisions.
The Notification No.12/2017-Central Tax of 28th June 2017, exempts services provided by an entity registered under Section 12AA of the Income-tax Act, 1961 by way of charitable activities.
GST vide entry No. 1 of the notification 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.
List of Activities Exempt of Charitable and Religious Trusts Under GST Regime
Activities relating to:
(A) Public health by way of:
- care or counseling of
(a) terminally ill persons or persons with severe physical or mental disability;
(b) persons afflicted with HIV or AIDS;
(c) persons addicted to a dependence-forming substance such as narcotic drugs or alcohol; or
- Public awareness of preventive health, family planning or prevention of HIV infection;
(B) Advancement of religion, spirituality or yoga
(C) Advancement of educational programs or skill development relating to:
- Abandoned, orphaned or homeless children;
- physically or mentally abused and traumatized persons;
- prisoners; or
- persons over the age of 65 years residing in a rural area;
(D) Preservation of environment including watershed, forests, and wildlife.
Rental Income of NGOs, Charitable and Religious Trusts Under GST
Entry No.13 of notification no.12/2017-Central Tax (Rate) of 28th June 2017, provides the following exemption to entities registered under Section 12AA of the Income Tax Act:
Services by a person by way of:
(a)Conduct of any religious ceremony;
(b)Renting of precincts of a religious place meant for general public, owned or managed by an entity registered as a charitable or religious trust under section 12AA of the Income-tax Act, 1961 (hereinafter referred to as the Income-tax Act) or a trust or an institution registered under subclause (v) of clause (23C) of section 10 of the Income-tax Act or a body or an authority covered under clause (23BBA) of section 10 of the said Income-tax Act:
Provided that nothing contained in an entry (b) of this exemption shall apply to:
- Renting of rooms where charges are one thousand rupees or more per day;
- The renting of premises, community halls, kalyanmandapam or open area, and the like where charges are ten thousand rupees or more per day;
- Renting of shops or other spaces for business or commerce where charges are ten thousand rupees or more per month.
Thus, income from letting out of such property is wholly exempt from GST. Conditions apply.
- If the immovable properties that are owned by charitable trusts like marriage halls, convention halls, rest houses for pilgrims, shops situated within the premises of a religious place.
Conditions for Non-Exempt Rental Income
Income from letting out properties not matching the conditions will lose exemption and income from it will be liable to GST.
It means that such properties are not located in the premises of a religious place or within the walls or boundary walls of a religious place are not exempt from GST.
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