GSTonCharitableTrusts,Non-ProfitOrganizations andCo-Operative Societies
CAYashwantJ.KasarB.Com,FCA,DISA,CISA,PMP,FAIA
Feb2018
“Supply"includes—(a) allformsofsupplyofgoodsorservicesorbothsuchassale,transfer,barter,exchange,licence,rental,leaseordisposalmadeoragreedtobemadeforaconsiderationbyapersoninthecourseorfurtheranceofbusiness;(b) importofservicesforaconsiderationwhetherornotinthecourseorfurtheranceofbusiness;(c) theactivities specified inSchedule I,madeoragreedtobemadewithoutaconsideration;and(d) theactivitiestobetreatedassupplyofgoodsorsupplyofservicesasreferredtoinSchedule II.Excludes–(a) activitiesortransactionsspecified inScheduleIII;or(b) suchactivities ortransactionsundertakenbytheCentralGovernment,aStateGovernmentoranylocalauthorityinwhichtheyareengagedaspublicauthorities,asmaybenotifiedbytheGovernmentontherecommendationsoftheCouncil
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“Person" includes—(a) anindividual;(b) aHinduUndividedFamily;(c) acompany;(d) afirm;(e) aLimitedLiabilityPartnership;(f) anassociationofpersonsorabodyofindividuals,whetherincorporatedornot,inIndiaoroutsideIndia;(g) anycorporationestablishedbyorunderanyCentralAct,StateActorProvincialActoraGovernmentcompanyasdefinedinclause (45)ofsection2oftheCompaniesAct,2013(18of2013)1;(h) anybodycorporateincorporatedbyorunderthelawsofacountryoutsideIndia;(i) aco-operativesocietyregisteredunderanylawrelatingtoco-operativesocieties;(j) alocalauthority;(k) CentralGovernmentoraStateGovernment;(l) societyasdefinedundertheSocietiesRegistrationAct,1860(21of1860);(m) trust;and(n) everyartificialjuridicalperson,notfallingwithinanyoftheabove;
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“Business" includes—(a) anytrade,commerce,manufacture,profession,vocation,adventure,wageroranyothersimilaractivity,whetherornotitisforapecuniarybenefit;
(b) anyactivityortransactioninconnectionwithorincidentalorancillarytosub-clause(a);
(c) anyactivityortransactioninthenatureofsub-clause(a), whetherornotthereisvolume,frequency,continuityorregularityofsuchtransaction;
(d) supplyoracquisitionofgoodsincludingcapitalgoodsandservicesinconnectionwithcommencementorclosureofbusiness;
(e) provisionbyaclub,association,society,oranysuchbody(forasubscriptionoranyotherconsideration)ofthefacilitiesorbenefitstoitsmembers;
(f) admission,foraconsideration,ofpersonstoanypremises;
(g) servicessuppliedbyapersonastheholderofanofficewhichhasbeenacceptedbyhiminthecourseorfurtheranceofhistrade,professionorvocation;
(h) servicesprovidedbyaraceclubbywayoftotalisator oralicencetobookmakerinsuchclub;and
(i) anyactivityortransactionundertakenbytheCentralGovernment,aStateGovernmentoranylocalauthorityinwhichtheyareengagedaspublicauthorities;
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Theprovisionsrelatingtotaxationofactivitiesofcharitableinstitutionsandreligioustrustshavebeenborrowedandcarriedoverfromtheerstwhileservicetaxprovisions.
Allservicesprovidedbysuchentitiesarenotexempt.Infact,therearemanyservicesthatareprovidedbysuchentitieswhichwouldbewithintheambitofGST.
NotificationNo.12/2017-Central Tax(Rate)dated28thJune2017ExemptsservicesprovidedbyentityregisteredunderSection12AA oftheIncome-taxAct,1961bywayofcharitableactivitiesfromwholeofGSTvide entryNo.1ofthenotification,
whichspecifiesthat"servicesbyanentityregisteredunderSection12AAofIncome-taxAct,1961bywayofcharitableactivities"areexemptfromwholeoftheGST.Thusasperthisnotification,exemptionisgiventothecharitabletrusts,onlyifthefollowingconditionsaresatisfied.
a) EntitiesmustberegisteredunderSection12AAoftheIncome-taxAct,and
b) Suchservicesoractivitiesbytheentityarebywayofcharitableactivities.
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Thus,itisessential thattheactivitiesmustconformtotheterm“CharitableActivities”which hasbeendefined inthenotificationasunder"charitableactivities"meansactivities relatingto:(i)publichealthbywayof:(A) careorcounseling of(I) terminallyillpersonsorpersonswithseverephysicalormentaldisability;(II) personsafflictedwithHIVorAIDS;(III) personsaddictedtoadependence-formingsubstancesuchasnarcoticsdrugsoralcohol;or(B) publicawarenessofpreventivehealth,familyplanningorpreventionofHIVinfection;(ii) advancementofreligion,spiritualityoryoga;(iii) advancementofeducationalprogrammesorskilldevelopmentrelatingto:(A) abandoned,orphanedorhomeless children;(B)physicallyormentallyabusedandtraumatizedpersons;(C) prisoners;or(D) personsovertheageof65yearsresidinginaruralarea;(iv) preservationofenvironmentincludingwatershed,forestsandwildlife.
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Thisnotificationmakestheexemptiontocharitabletrustsavailableforcharitableactivitiesmorespecific.
WhiletheincomefromonlythoseactivitieslistedaboveisexemptfromGST,incomefromtheactivitiesotherthanthosementionedaboveistaxable.
Thus,therecouldbemanyservicesprovidedbycharitableandreligioustrustwhicharenotconsideredascharitableactivitiesandhence,suchservicescomeundertheGSTnet.
Theindicativelistofsuchservicescouldberentingofpremisesbysuchentities,grantofsponsorshipandadvertisingrightsduringconductofevents/functionsetc.
NOTIFICATION NO.11/2017-CENTRAL TAX(RATE), DATED28-6-2017, ASAMENDED BYNOTIFICATION NO.1/2018-CENTRAL TAX(RATE), DATED25-1-2018
(iv)Compositesupplyofworkscontractasdefinedinclause(119)ofsection2oftheCentralGoodsandServicesTaxAct,2017,suppliedbywayofconstruction,erection,commissioning,installation,completion,fittingout,repair,maintenance,renovation,oralterationof,—
…..1[ (g) abuildingownedbyanentityregisteredundersection12AAofthe
Income-taxAct,1961(43of1961),whichisusedforcarryingouttheactivitiesofproviding,centralised cookingordistribution,formid-daymealsunderthemid-daymealschemesponsoredbytheCentralGovernment,StateGovern-ment,Unionterritoryorlocalauthorities.]
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HumanhealthandsocialcareserviceExemptionsareprovidedvideNotificationNo.12/2017-CT(Rates)and9/2017-IT(Thisservicefallsunderheading9993.
Exemptiontohealthcareservices
Servicesbywayof-
(a)healthcareservicesbyaclinicalestablishment,anauthorisedmedicalpractitionerorpara-medics
(b)servicesprovidedbywayoftransportationofapatientinanambulance,otherthanthosespecified in(a)aboveareexemptfromGST.
Wastetreatmentfacilitytomedicalestablishment
Servicesprovidedbyoperatorsofthecommonbio-medicalwastetreatmentfacilitytoaclinicalestablishment bywayoftreatmentordisposalofbio-medicalwasteortheprocesses incidentaltheretoareexempt.
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ServicesofcordbloodbankServicesprovidedbythecordbloodbanksbywayofpreservationof stemcellsoranyotherserviceinrelationtosuchpreservationareexempt.
Authorised MedicalPractitioner"Authorised medicalpractitioner"meansamedicalpractitionerregisteredwithanyofthecouncilsoftherecognised systemofmedicinesestablishedorrecognised bylawinIndiaandincludesamedicalprofessionalhavingtherequisitequalification topracticeinanyrecognised systemofmedicinesinIndiaasperanylawforthetimebeing inforce-para 2ofNotificationNo.12/2017-CT(Rate)andNo.9/2017-IT(Rate)bothdated28-6-2017,effectivefrom1-7-2017.
ClinicalEstablishment"Clinicalestablishment"meansahospital,nursinghome,clinic,sanatoriumoranyotherinstitution by,whatevernamecalled,thatoffersservicesorfacilitiesrequiringdiagnosisortreatmentorcareforillness, injury,deformity,abnormalityorpregnancyinanyrecognised systemofmedicinesinIndia,oraplaceestablishedasanindependententityorapartofanestablishment tocarryoutdiagnosticorinvestigativeservicesofdiseases- para 2ofNotificationNo.12/2017-CT(Rate)andNo.9/2017-IT(Rate)bothdated28-6-2017,effectivefrom1-7-2017.
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HealthCareServices
"Healthcareservices"meansanyservicebywayofdiagnosisortreatmentorcareforillness, injury,deformity,abnormalityorpregnancyinanyrecognised systemofmedicinesinIndiaandincludesservicesbywayoftransportationofthepatienttoandfromaclinicalestablishment,butdoesnotincludehairtransplantorcosmeticorplasticsurgery,exceptwhenundertakentorestoreortoreconstructanatomyorfunctionsofbodyaffectedduetocongenitaldefects,developmentalabnormalities,injuryortrauma - para 2ofNotificationNo.12/2017-CT(Rate)andNo.9/2017-IT(Rate)bothdated28-6-2017,effectivefrom1-7-2017.
CircularNo.32/06/2018-GST -Clarifications(1)Hospitalshireseniordoctors/consultants/techniciansindependently,withoutanycontractofsuchpersonswiththepatient;andpaythemconsultancycharges,withouttherebeinganyemployer-employeerelationship.WillsuchconsultancychargesbeexemptfromGST?WillrevenuetakeastandthattheyareprovidingservicestohospitalsandnottopatientsandhencemustpayGST?
- Servicesprovidedbyseniordoctors/consultants/technicianshiredbythehospitals,whetheremployeesornot,arehealthcareserviceswhichareexempt.
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(2)Retentionmoney:Hospitalschargethepatients,say,Rs.10000/-andpaytotheconsultants/techniciansonlyRs.7500/- andkeepthebalanceforprovidingancillaryserviceswhichincludenursingcare,infrastructurefacilities,paramediccare,emergencyservices,checkingoftemperature,weight,bloodpressureetc.WillGSTbeapplicableonsuchmoneyretainedbythehospitals?
- Healthcareserviceshavebeendefinedtomeananyservicebywayofdiagnosisortreatmentorcareforillness,injury,deformity,abnormalityorpregnancyinanyrecognised systemofmedicinesinIndia[para2(zg)ofnotificationNo.12/2017- CT(Rate)].Therefore,hospitalsalsoprovidehealthcareservices.
Theentireamountchargedbythemfromthepatientsincludingtheretentionmoneyandthefee/paymentsmadetothedoctorsetc.,istowardsthehealthcareservicesprovidedbythehospitalstothepatientsandisexempt.
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(3)Foodsuppliedtothepatients:Healthcareservicesprovidedbytheclinicalestablishmentswillincludefoodsuppliedtothepatients;butsuchfoodmaybepreparedbythecanteensrunbythehospitalsormaybeoutsourcedbytheHospitalsfromoutdoorcaterers.Whenoutsourced,thereshouldbenoambiguitythatthesuppliersshallchargetaxasapplicableandhospitalwillgetnoITC.Ifhospitalshavetheirowncanteensandpreparetheirownfood;thennoITCwillbeavailableoninputsincludingcapitalgoodsandinturniftheysupplyfoodtothedoctorsandtheirstaff;suchsupplies,evenwhennotcharged,maybesubjectedtoGST ?
- Foodsuppliedtothein-patientsasadvisedbythedoctor/nutritionistsisapartofcompositesupplyofhealthcareandnotseparatelytaxable.Othersuppliesoffoodbyahospitaltopatients(notadmitted)ortheirattendantsorvisitorsaretaxable.
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So,ifcharitabletrustsrunahospitalandappointspecialistdoctors,nursesandprovidemedicalservicestopatientsataconcessionalrate,suchservicesarenotliabletoGST.
Ifhospitalshirevisitingdoctors/specialistsandthesedeductsomemoneyfromconsultation/visitfeespayabletodoctorsandtheagreementbetweenhospitalandconsultantdoctorsissuchthatsomemoneyischargedforprovidingservicestodoctors,theremaybeGSTonsuchamountdeductedfromfeespaidtodoctors.
EntryNo.13ofNotification No.12/2017-Central Tax(Rate)dated28thJune,2017ProvidesthefollowingexemptiontoentitiesregisteredunderSection12AAoftheIncomeTaxAct:
Servicesbyapersonbywayof:
(a)conductofanyreligiousceremony;
(b)rentingofprecinctsofareligiousplacemeantforgeneralpublic,ownedormanagedbyanentityregisteredasacharitableorreligioustrustundersection12AA oftheIncome-taxAct,1961(hereinafterreferredtoastheIncome-taxAct)oratrustoraninstitutionregisteredundersub-clause(v)ofclause(23C)ofsection10oftheIncome-taxActorabodyoranauthoritycoveredunderclause(23BBA)ofsection10ofthesaidIncome-taxAct:
Providedthatnothingcontainedinentry(b)ofthisexemptionshallapplyto:
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(i)rentingofroomswherechargesareonethousandrupeesormoreperday;
(ii)rentingofpremises,communityhalls,kalyanmandapam oropenarea,andthelikewherechargesaretenthousandrupeesormoreperday;
(iii)rentingofshopsorotherspacesforbusinessorcommercewherechargesaretenthousandrupeesormorepermonth.
Thus,thelawgivesalimitedexemptiontorentingofonlyreligiousprecinctsorareligiousplacemeantforgeneralpublicbytheentityregisteredundersection12AAoftheIncomeTaxAct.Asperclause(zc)ofthesaidnotification, theterm"generalpublic"means"thebodyofpeopleatlargesufficientlydefinedbysomecommonqualityofpublicorimpersonalnature".
Theterm"religiousplace"aspertheclause(zy)ofthesaidnotificationmeans"aplacewhichisprimarilymeantforconductofprayersorworshippertaining toareligion,meditation,orspirituality".Dictionarymeaningof"precincts"isanareawithinthewallsorperceivedboundariesofaparticularbuilding orplace,anenclosedorclearlydefinedareaofgroundaroundacathedral,church,temple, college,etc.
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Thisimpliesthatifimmovablepropertiesownedbycharitabletrustslikemarriagehall,conventionhall,resthouseforpilgrims, shopssituatedwithinthepremisesofareligiousplacearerentedout,incomefrom lettingoutofsuchproperty iswhollyexemptfromGST.Butifsuchpropertiesarenotsituatedintheprecinctsofareligiousplacemeaningtherebynotwithinwallsorboundarywallsofthereligiousplace,incomefromsuchlettingoutwilllosethisexemptionandincomefromitwillbeliabletoGST.
Incomefromareligiousceremonyorganisedbyacharitabletrustisexemptaspertheabovenotification.SotheincomefromNavratri functions, otherreligious functions, andreligiouspoojas conductedonspecialoccasionslikereligious festivalsbypersonssoauthorised forthispurposebythecharitableorreligious trustareexemptfromGST.
Butacarefulperusalof thisexemptionshowsthatallincomefromsuchareligiousceremonyisnotexempt(servicesother thanbywayofconductofreligiousceremonyarenotexempt).Therefore,thenatureof incomeisanessentialfactorforascertainingwhetheritwillbetaxableorexempt.Ifincomelosesitsreligiousnature,itisdefinitelychargeabletoGST.Forexample,ifwithregardtoGaneshutsav orotherreligiousfunctions,charitabletrustsrentouttheirspacetoagenciesforadvertisementhoardings,incomefromsuchadvertisementischargeabletoGST,asthiswillbeconsideredasincomefromtheadvertisementservices.Further, ifdonation forreligiousceremonyisreceivedwithspecificinstructions toadvertisethenameofadonor, suchdonation incomewillbesubjecttoGST.Butifdonation forreligiousceremonyisreceivedwithout suchinstructions, itmaynotbesubjecttoGST.
EntryNo.80ofNotification No.12/2017-Central Tax(Rate)
Similarly,entryNo.80ofNotificationNo.12/2017-CentralTax(Rate),providesthefollowingexemptiontoanentityregisteredunderSection12AA.
Servicesbywayoftrainingorcoachinginrecreationalactivitiesrelatingto:
(a)artsorculture,or
(b)sportsbycharitableentitiesregisteredundersection12AAoftheIncome-taxAct.
Thus,servicesprovidedbywayoftrainingorcoachinginrecreationalactivitiesrelatingtoartsorcultureorsportsbyacharitableentitywillbeexemptfromGST.
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EducationServicesThisservicefallsunderheading9992.
ThecommercialeducationissubjecttoGST@18%(CGST9%andSGST9%)orIGST18%.
VariousexemptionsarecontainedinNotificationNo.12/2017-CT(Rates)and9/2017-IT(Rates)bothdated28-6-2017,effectivefrom1-7-2017.
ServicesprovidedbyeducationinstitutionServicesuppliedbyaneducationalinstitutiontoitsstudents,facultyandstaffisexemptfromGST.
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GSTonmanagement ofeducational institutions bycharitabletrustsIftrustsarerunningschools,collegesoranyothereducationalinstitutionsspecificallyforabandoned,orphans,homelesschildren,physicallyormentallyabusedpersons,prisonersorpersonsoverageof65yearsoraboveresidinginaruralarea,suchactivitieswillbeconsideredascharitableactivitiesandincomefromsuchsupplieswillbewhollyexemptfromGST.
Meaningofthewordruralareadefinedinsaidnotificationisruralareameanstheareacomprisedinavillageasdefinedinlandrevenuerecordsexcludingtheareaunderanymunicipalcommittee,municipalcorporation,townareacommittee,cantonmentboardornotifiedareacommitteeoranyareathatmaybenotifiedasanurbanareabytheCentralGovernmentoraStateGovernment.
CAYASHWANT J.KASAR 25
ServicesbyandtoEducationInstitutions (includinginstitutions runbyCharitable trusts)
Ifthetrustisrunningschoolforthepurposewhichisnotcoveredabove(i.e.notcomingwithinthescopeofcharitableactivitiesasdefinedinthenotification),incomefromsuchactivitywillnotbeexemptunderEntry1ofnotificationno.9/2017-lntegratedTax(Rate)or12/2017-CentralTax(Rate),butwillbeexemptunderentry66ofnotificationno.12/2017-CentralTax(Rate).
Entry66providesforexemptionw.r.t supplybyandtoeducationalinstitutionsandonlythefollowingservicesreceivedbyeligibleeducationalinstitutionareexempt.
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66.Servicesprovided–
(a)byaneducationalinstitutiontoitsstudents,facultyandstaff;1[ (aa)byaneducationalinstitutionbywayofconductofentrance
examinationagainstconsiderationintheformofentrancefee; ]
(b)toaneducationalinstitution,bywayof,-
(i)transportationofstudents,facultyandstaff;
(ii)catering,includinganymid-daymealsschemesponsoredbytheCentralGovernment,StateGovernmentorUnionterritory;
(iii)securityorcleaningorhouse- keepingservicesperformedinsucheducationalinstitution;
(iv)servicesrelatingtoadmissionto,orconductofexaminationby,suchinstitution;
1[***]
2[ (v)supplyofonlineeducationaljournalsorperiodicals: ]
CAYASHWANT J.KASAR 28
Provided thatnothingcontainedin 3[sub-items(i),(ii)and(iii)ofitem(b)] shallapplytoaneducationalinstitutionotherthananinstitutionprovidingservicesbywayofpre-schooleducationandeducationuptohighersecondaryschoolorequivalent:2 [Providedfurther thatnothingcontainedinsub-item (v)ofitem(b)shallapplytoaninstitutionprovidingservicesbywayof,—
(i)pre-schooleducationandeducationuptohighersecondaryschoolorequivalent;or
(ii)educationasapartofanapprovedvocationaleducationcourse. ]
1. InsertedbyNotificationNo.2/2018-CentralTax(Rate),dated25-1-2018,w.e.f. 25-1-2018.
2. InsertedbyNotificationNo.2/2018-CentralTax(Rate),dated25-1-2018,w.e.f. 25-1-2018.
CircularNo.32/06/2018-GST -ClarificationsIshostelaccommodationprovidedbyTruststostudentscoveredwithinthedefinitionofCharitableActivitiesandthus,exemptunderSl.No.1ofnotificationNo.12/2017-CT(Rate)?
Hostelaccommodationservicesdonotfallwithintheambitofcharitableactivitiesasdefinedinpara2(r)ofnotificationNo.12/2017-CT(Rate).However,servicesbyahotel,inn,guesthouse,cluborcampsite,bywhatevernamecalled,forresidentialorlodgingpurposes,havingdeclaredtariffofaunitofaccommodationbelowonethousandrupeesperdayorequivalentareexempt.Thus,accommodationserviceinhostelsincludingbyTrustshavingdeclaredtariffbelowonethousandrupeesperdayisexempt.[Sl.No.14ofnotificationNo.12/2017-CT(Rate)refers]
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ServicessuppliedbyIIM
ServicesprovidedbytheIndianInstitutesofManagement,aspertheguidelinesoftheCentralGovernment,totheirstudents,bywayofthefollowingeducationalprogrammes, except ExecutiveDevelopmentProgramme–(a) twoyearfulltimePostGraduateProgrammesinManagementfor
thePostGraduateDiplomainManagement,towhichadmissionsaremadeonthebasisofCommonAdmissionTest(CAT)conductedbytheIndianInstituteofManagement
(b) fellowprogrammeinManagement(c) fiveyearintegratedprogrammeinManagement
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ServicessuppliedbyNationalSkillDevelopmentCorporation(NSDC)
Servicesprovided by- (a)theNationalSkillDevelopmentCorporationsetupbytheGovernmentofIndia(b)aSectorSkillCouncilapprovedbytheNationalSkillDevelopmentCorporation (c)anassessmentagencyapprovedbytheSectorSkillCouncilortheNationalSkillDevelopmentCorporation (d)atrainingpartnerapprovedbytheNationalSkillDevelopmentCorporationortheSectorSkillCouncil,inrelationtofollowing areexempt(i)theNationalSkillDevelopmentProgrammeimplemented bytheNationalSkillDevelopmentCorporation;or(ii)avocationalskilldevelopmentcourseunder theNationalSkillCertificationandMonetaryRewardScheme;or(iii)anyotherSchemeimplementedbytheNationalSkillDevelopment - NotificationNo.12/2017-CT(Rate)andNo.9/2017-IT(Rate)bothdated28-6-2017,effectivefrom1-7-2017.
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ServicesofassessmentbodiesunderNSDCServicesofassessingbodiesempanelledcentrallybytheDirectorateGeneralofTraining,MinistryofSkillDevelopmentandEntrepreneurship bywayofassessmentsunder theSkillDevelopment InitiativeSchemeareexempt.
ServicesunderDeen Dayal Upadhyaya YojanaServicesprovidedbytrainingproviders (Projectimplementationagencies)underDeen Dayal Upadhyaya Grameen Kaushalya Yojana implementedbytheMinistryofRuralDevelopment, GovernmentofIndiabywayofoffering skillorvocationaltrainingcoursescertifiedbytheNationalCouncilforVocationalTrainingareexempt.
TrainingprogrammeswhereexpenditurebornebyCentralGovernment -Servicesprovided totheCentralGovernment, StateGovernment, UnionterritoryadministrationunderanytrainingprogrammeforwhichtotalexpenditureisbornebytheCentralGovernment, StateGovernment, Unionterritoryadministrationareexempt.
Definitions relevantinrespectofeducationservices"Approved vocationaleducationcourse"means,-(i)acourserunbyanindustrial traininginstituteoranindustrial trainingcentreaffiliatedtotheNationalCouncilforVocationalTrainingorStateCouncilforVocationalTrainingofferingcoursesindesignatedtradesnotified under theApprenticesAct,1961or(ii)aModularEmployableSkillCourse,approvedbytheNationalCouncilofVocationalTraining, runbyaperson registeredwiththeDirectorateGeneralofTraining,MinistryofSkillDevelopmentandEntrepreneurship - para 2ofNotificationNo.12/2017-CT(Rate)andNo.9/2017-IT(Rate)bothdated28-6-2017,effectivefrom1-7-2017.
EducationalInstitution
"Educationalinstitution"meansaninstitutionproviding servicesbywayof- (i)pre-schooleducationandeducationuptohigher secondaryschoolorequivalent(ii)educationasapartofacurriculumforobtainingaqualificationrecognisedbyanylawforthetimebeing inforce(iii)educationasapartofanapprovedvocationaleducationcourse- para 2ofNotificationNo.12/2017-CT(Rate)andNo.9/2017-IT(Rate)bothdated28-6-2017,effectivefrom1-7-2017.
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GSTonservices providedtocharitabletrustsServicesprovidedtocharitabletrustsarenotoutofambitofGST.AllservicesotherthanthosespecificallyexemptedprovidedtocharitabletrustswillbesubjecttoGST.
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GSTonsupplyofgoodsbyCharitable TrustsThereisnoexemptionforsupplyofgoodsbycharitabletrusts.ThusanygoodssuppliedbysuchcharitabletrustsforconsiderationshallbeliabletoGST.Forinstance,saleofgoodsshallbechargeabletoGST.
CAYASHWANT J.KASAR 37
ImportofServicesAlsoaspertheentryno.10ofNotificationno.9/2017-lntegratedTax(Rate)dated28.06.2017,ifcharitabletrustsregisteredunderSection12AAofIncome-taxActreceivesanyservicesfromproviderofserviceslocatedinnon-taxableterritory,forcharitablepurposes,suchservicesreceivedarenotchargeabletoGSTunderthereversechargemechanism.
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GSTonarranging yogaandmeditationcampbycharitabletrustsCharitabletrustsorganiseyogacampsorotherfitnesscampsandtheygenerallyarenotfreeforparticipants,astrustschargesomeamountfromtheparticipantsinthenameofaccommodationorparticipation.Iftrustsarearrangingresidentialornon-residentialyogacampsbyreceivingdonationorotherchargesfromtheparticipants,thesewillnotbeconsideredcharitableactivities(asitisdifferentfromadvancementofreligion,spiritualityoryoga).
Sincedonationisreceivedforparticipation,itwillbeconsideredcommercialactivityanditwilldefinitelybecoveredundertheGST.Similarly,ifcharitabletrustsorganisefitnesscampsinreiki,aerobics,etc.,andreceivedonationfromparticipants,suchincomethatcomesunderhealthandfitnessservicesandwillalsobetaxable.
CAYASHWANT J.KASAR 39
GSTonrunning ofpublic libraries bycharitable trusts
NoGSTwillbeapplicableifcharitabletrustsarerunningpubliclibrariesandlendbooks,otherpublicationsorknowledge-enhancingcontent/materialfromtheirlibraries.ThisactivityisspecificallyexcludedbywayofentryNo.50ofNotificationNo.12/2017- CentralTaxRate(andisapplicableforeveryone,includingcharitabletrusts);whichmeansservicesbyprivatelibrariesarenotexempt.Thus,ifdonorsofpubliclibraryremainopentoallandifitcaterstoeducational,informationalandrecreationalneedsofitsusersandfinanceforsuchlibrariescanbeprovidedfromdonation,subscription,fromspecialfundcreatedforthispurposeorfromcombinationofallsuchsources,itwillbecalledpubliclibraryandnoGSTwillbeapplicableonsuchservices.
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Banking servicesfallunderheading9971.
ThemainservicesuppliedbyBanks isofcoursepaymentofinteresttodepositors.
IsInterestsubjecttoGST?“Goods"meanseverykindofmovablepropertyotherthanmoneyandsecurities butincludesactionableclaim,growingcrops,grassandthingsattachedtoorformingpartofthelandwhichareagreedtobeseveredbeforesupplyorunderacontractofsupply;
“Services"meansanythingotherthangoods,moneyandsecurities butincludesactivitiesrelatingtotheuseofmoney oritsconversionbycashorbyanyothermode,fromoneform,currencyordenomination,toanotherform,currencyordenominationforwhichaseparateconsiderationischarged;
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Servicesbywayof— (a)extendingdeposits,loansoradvancesinsofarastheconsiderationisrepresentedbywayofinterestordiscount(otherthaninterestinvolvedincreditcardservices)isexemptfromGST- NotificationNo.12/2017-CT(Rate)andNo.9/2017-IT(Rate)bothdated28-6-2017,effectivefrom1-7-2017.
"Interest"meansinterestpayableinanymannerinrespectofanymoneysborrowedordebtincurred(includingadeposit,claimorothersimilarrightorobligation)butdoesnotincludeanyservicefeeorotherchargeinrespectofthemoneysborrowedordebtincurredorinrespectofanycreditfacilitywhichhasnotbeenutilized.
Saleorpurchaseofforeignexchangeamong banks ordealersisexempt
Serviceof interse saleorpurchaseofforeigncurrencyamongst banks orauthorizeddealersofforeignexchangeoramongst banks andsuchdealersisexempt- NotificationNo.12/2017-CT(Rate)andNo.9/2017-IT(Rate)bothdated28-6-2017,effectivefrom1-7-2017.
CAYASHWANT J.KASAR 45
ExemptiontoGSTon bank chargesforcashlesstransactionsupto Rs2,000
Servicesbyanacquiring bank,toanypersoninrelationtosettlement ofanamountupto twothousandrupees inasingletransactiontransactedthroughcreditcard,debitcard,chargecardorotherpaymentcardservice.
"Acquiring bank"meansany banking company,financial institutionincludingnon-banking financialcompanyoranyotherperson,whomakesthepaymenttoanypersonwhoacceptssuchcard- NotificationNo.12/2017-CT(Rate)andNo.9/2017-IT(Rate)bothdated28-6-2017,effectivefrom1-7-2017.
Bank,FI,NBFCliabletopayGSTunderreversechargeinrespectofservicesreceivedfromrecoveryagent
Incaseofservicessuppliedbyarecoveryagenttoa banking companyorafinancialinstitution oranon-bankingfinancial company,therecipientofservicei.e. banking companyorafinancial institutionoranon-bankingfinancial company,locatedinthetaxableterritoryNotification isliabletopayGSTunderreversecharge- No.13/2017-CT(Rates)and10/2017-IT(Rates)bothdated28-6-2017,effectivefrom1-7-2017.
TaxabilityofServices•DDandOtherCommission
•LoanProcessingCharges•ATMCharges
•CreditCardInterest
•PrepaymentCharges
•LockerRent•ForeignExchangeCharges•LetterofCreditCharges
•GuaranteeCommission
•EntryFees/MembershipFees
CAYASHWANT J.KASAR 46
•Interest
•ProfitonSaleofInvestment
•Dividend
•PenalInterest
Taxable Exempt
Banking andotherfinancial serviceswithinIndiaTheplaceofsupplyof bankingandotherfinancialservicesincludingstockbrokingservicestoanypersonshallbethelocationoftherecipientofservicesontherecordsofthesupplierofservices- section12(12)ofIGSTAct.
However,ifthelocationoftherecipientofservicesis not ontherecordsofthesupplierofservices,theplaceofsupplyshallbelocationofthesupplierofservices.
CAYASHWANT J.KASAR 47
Servicessuppliedby BankstoaccountholdersoutsideIndiaIncaseofservicessuppliedbya banking company,orafinancialinstitution,oranon-banking financialcompany,toaccountholders,theplaceofsupplyshallbethelocationofthesupplierofservice- section13(8)(a)ofIGSTAct.Really,thisprovisionisappliesonlytoIndian bank orFinancial Institution,asaforeign bank canneverbe banking companyorFinancial Institutionasdefined"Account"meansanaccountbearinginteresttothedepositor,andincludesanon-residentexternalaccountandanon-residentordinaryaccount-Explanation (a)tosection13(8)ofIGSTAct."Banking company"hasthemeaningassignedtoitinclause(a)ofsection45AoftheReserve Bank ofIndiaAct,1934- Explanation (b)tosection13(8)ofIGSTAct.[Thus,aforeign Bank providingservicefromoutside Indiacannotbe'banking company'.Hence,generalprovisionofplaceofsupplyofservicewillapplyi.e.locationofrecipientofservicewillbeplaceofsupplyofservice].
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ITC:Special provisions inrespect of Banks,FIandNBFCA banking companyorafinancialinstitution includinganon-banking financialcompany,engagedinsupplyingservicesbywayofacceptingdeposits,extending loansoradvancesshallhavetheoptiontoeithercomplywiththeprovisionsofsection17(2)ofCGSTAct,or availof,everymonth,anamountequaltofiftypercentoftheeligibleinputtaxcreditoninputs,capitalgoodsandinputservicesinthatmonth- section17(4)ofCGSTAct.Theoptiononceexercisedshallnotbewithdrawnduringtheremainingpartofthefinancialyear- first proviso tosection17(4)ofCGSTAct.The50%restrictionshallnotapplytothetaxpaidonsuppliesmadebyoneregisteredpersontoanotherregisteredpersonhavingsamePANnumber-second proviso tosection17(4)ofCGSTAct.Thisprovisionapplieswhen Bank/FI/NBFCinoneStateprovidesservices(orsuppliesgoods)toitsownbranchinanotherState.Inmostofthecases, Bank,FIorNBFCmayfinditeasyandprofitabletoavail50%ofinputtaxcreditinsteadofavailinginputtaxcreditonproportionatebasisaspersection17(2)ofCGSTAct.
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Timelimitforissuingtaxinvoiceforservices
Theinvoiceincaseoftaxablesupplyofservices,shallbeissuedwithinaperiodofthirtydaysfromthedateofsupplyofservice- Rule47ofCGSTandSGSTRules,2017.
Ifthesupplierofservicesisaninsurerora banking companyorafinancialinstitution,orNBFC,invoicecanbeissuedwithinfortyfivedaysfromthedateofsupplyofservice- first proviso toRule47ofCGSTandSGSTRules,2017.
Relaxationstoinsurance, Bank,FI,telecomoperatorandNBFCinissuinginvoiceforownbranch/divisioninotherStates
Aspersection25(5)ofCGSTandSGSTAct,ifaperson(withsinglePAN)hasestablishmentsindifferentStates,herequiresGSTregistrationineachState.SuchestablishmentsindifferentStatesaretreatedas'distinctpersons'forpurposeofCGSTandSGSTAct.
TheestablishmentinoneStatemaysupplyservicetoestablishmentinanotherState.Thisisparticularlyinsectorslike banking,insurance,NBFC,FinancialInstitutionsandtelecom.Insuchcases,theymaybegivenrelaxationbyGovernmentonissueofinvoiceeitherwhenthesupplierrecordsthesameinhisbooksoronquarterlybasis-secondprovisotoRule47ofCGSTandSGSTRules,2017.
Sofar,suchnotificationhasnotbeenissued.
Suchinter-StateinvoicesandtransfersarerequiredasGSTisadestinationbasedtaxandtaxistobepaidwheretheservicesorgoodsarefinallyconsumed.
CAYASHWANT J.KASAR 52
TaxInvoicesissuedby Bank,FI,NBFCandinsurancecompany
TaxInvoiceissuedby Bank,FI,NBFCandinsurermaybecalledbyanyothername.Itcanbemadeavailablephysicallyorelectronically.Itmaynothaveserialnumberandaddressofrecipient.However,itshouldhaveotherdetailsasspecifiedinrule46ofCGSTandSGSTRules - Rule44(2)ofCGSTandSGSTRules,2017.
ThisrelaxationshallalsoapplytoBillofSupply,ReceiptVoucher,RefundVoucher,PaymentVoucher,DebitNote,CreditNoteandRevisedInvoice.
InvoiceofISDof banking,FIorNBFC - WheretheInputServiceDistributorisanofficeofa bankingcompanyorafinancialinstitutionorNBFC,ataxinvoiceshallincludeanydocumentinlieuthereof,bywhatevernamecalled,whetherornotseriallynumberedbutcontainingtheinformationasprescribedabove- proviso toRule54(1)ofCGSTandSGSTRules,2017.
ActivityofHousingSocietyØFormationofSocietyoncompletionofbuilding
ØAllotmentofSharetoit’smember
ØContribution frommembersformaintenanceofBuilding
WhetherExemptionisavailableonthiscontributionfromMember?
CAYASHWANT J.KASAR 54
Services ofhousingsocietiesorResidentWelfareAssociationThisserviceis'HomeOwners'Association' andfallsunderserviceclassificationtariff999598.
Servicebyanunincorporatedbodyoranon- profitentityregisteredunderanylawforthetimebeing inforce,toitsownmembersbywayofreimbursement ofchargesorshareofcontributionuptoanamountofRs 7,500permemberforsourcingofgoodsorservicesfromathirdpersonforthecommonuseofitsmembersinahousingsocietyoraresidentialcomplexareexempt.
ServicesprovidedbyhousingsocietyorRWAforprovisionofservicewhichisexemptfromGST
Servicebyanunincorporatedbodyoranon-profitentityregisteredunderanylawforthetimebeing inforce,toitsownmembersbywayofreimbursement ofchargesorshareofcontribution fortheprovisionofcarryingoutanyactivitywhichisexemptfromthelevyofGoodsandServiceTaxisexempt[Thisprovisionapplieswhenthehousing societyorRWAundertakesactivitywhichisexemptfromGSTlikemedicalcamp,socialactivitiesetc.]
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WhetheranyExemptionisallowedtoHousingSocietyEntryNo.77ofNotificationNo.12/2017- CentralTax (Rate)
Servicebyanunincorporatedbodyoranon-profitentityregisteredunderanylawforthetimebeing inforce,toitsownmembersbywayofreimbursement ofchargesorshareofcontribution–
(a)asatradeunion;
(b)for theprovisionofcarryingoutanyactivitywhichisexemptfromthelevyofGoodsandServiceTax;or
(c)up toanamountof 1[seventhousand fivehundred] rupeespermonthpermember forsourcingofgoodsorservicesfromathirdperson forthecommonuseofitsmembersinahousing societyoraresidentialcomplex.
1. Substituted for"fivethousand"byNotificationNo.2/2018-CentralTax(Rate),dated25-1-2018,w.e.f. 25-1-2018.
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Case ContributionfromMembers Other receipts TotalReceiptsinthe
FinancialYear
Whetherliabletoregister
TaxPayable
onUpto 7500 Above7500 Exempted
ReceiptsTaxableReceipts
Contribution
TotalReceipts
Contribution
TotalReceipts
Eg.InterestIncome
Eg.RentingofTower
1 3000 2100000 0 0 0 0 2100000 No 0
2 3000 1500000 0 0 600000 0 2100000 No 0
3 3000 1500000 0 0 0 600000 2100000 Yes 600000
4 3000 1500000 7501 250000 0 0 1750000 No 0
5 3000 1500000 7501 1000000 0 0 2500000 Yes 1000000
6 0 0 7501 1750000 0 0 1750000 No 0
7 0 0 7501 1750000 400000 0 2150000 Yes 1750000
8 0 0 7501 1750000 0 400000 2150000 Yes 2150000
9 0 0 0 0 2500000 0 2500000 No 0
10 0 0 0 0 0 2500000 2500000 Yes 2500000
11 3000 900000 7501 500000 400000 400000 2200000 Yes 900000
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PropertyTax
• Whataboutproperty taxonparkingwhichissold tomember?Asitisseparatelyidentifiable foreachmember, thisispureagentservice
• WhatAboutPropertytaxoncommonarea?
SinkingFund/Building
• WhatisSinking Fund/building fund?
Fundcollectedfordevelopment ofbuilding infuture
• WhetheritisTaxable?
Itisusedbysocietyinfuturefor itsmemberfordevelopment.Thereforeitwillbetreatedasserviceandwillbetaxableonreceiptbasis.
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• Whetheritiscoveredforcalculatingexemptionlimit?
Yes,asitiscontribution frommemberforcommonpurpose itwillbecountedfor7500limit.
MaintenanceandRepaircharges
• WhatisMaintenanceandRepaircharges?
Maintenanceastheaesuggestistheamountcollectivelyreimbursed tothesocietytoupkeepandmaintainthebuilding andpremisesonregularbasis.
• WhattypeofChargesareincludeinthis?
Electricitychargesforcommonareas,watchmanorsecuritychargesandothermiscellaneousexpensesincurredbythesocietyincludingaccounting,auditetc.ispartofmaintenancecharges.
• WhetheritisTaxable?
Yes,subjecttotolimitofexemptionof7500.
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ShareTransferFees
• WhatisShareandTransferFees?
Sharetransferfeesaretheamountchargedbythe societyfortransferofsharesbymember
• WhetheritisTaxable?
Yes,itistaxable.
• Whetheritiscoveredforcalculatingexemptionlimit?
No,itisnotcoverinexemptionasitisnotcontribution forsourcingofservicefromthirdperson.
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NonOccupancyCharges
• WhatisNonoccupancyCharges?
Nonoccupancychargesarechargesleviedbyahousing societyonlywhenaflatorunitisletoutbyitsmembers
• WhetheritisTaxable?
Yes,itistaxable
• Whetheritiscoveredforcalculatingexemptionlimit?
No,itisnotcoverinexemptionasitisnotcontribution forsourcingofservicefromthirdperson
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ParkingCharges
• WhatisParkingCharges?
Chargestoregulatetheparkingplacebetweenthemembersandproviding ofspacebyuseofvacantlandbelonging tothesocietyforaconsideration.
• WhetheritisTaxable?
YesitispurelyserviceandthusitistaxableinNature.
• Whetheritiscoveredforcalculatingexemptionlimit?
Noasthereisno3rd person isinvolved inthisservice.
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WaterCharges
• WhatisWaterCharges?thesocietyisnotselling thewatertoitsmembers.Itisjustproviding thepipeline todeliverwaterintheenterprises.
• WhatisroleofSocietyinthis?BillingbyMunicipal corporation inthenameofsocietyandthenonsomebasissocietycollectchargesfrommember.
• WhetheritisTaxable?Yes,asitisagaincontribution frommember forcommonuseofitsmember.Thisistaxablesubjecttolimitofexemptionof7500.
• WhataboutcommonWaterusedlikeSwimmingPool?Itisalsotaxablesubjecttolimitofexemptionof7500.
• Whatifdifferentmeterisprovided foreachmember?Itwillfallunderpureagentservice,sonottaxable.
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Chargesforuseofclubhouse,swimmingPool,etc
• WhatisWaterCharges?Thesearespecificservicesbythesocietytothememberopting forsuchfacilities.
• WhetheritisTaxable?Yes,subjecttoexemptionlimitofRs.7500.
OtherTransaction
• RentalforMobile towerRentingServiceLiabletotaxat
• Hording chargesAdvertisementChargesLiabletoTax
• UseofterraceforfunctionofnonmemberormemberRentingServiceLiabletotax
• InterestondefaultchargesNotcoveredinexemptionasitisnotinterestonadvances.Thereforeliabletotax
CAYashwantJ.KasarB.Com,FCA,DISA,CISA,PMP,FAIA
Cell:+919822488777Email:[email protected]
ThankYou!
CAYASHWANT J.KASAR 66
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