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Charitable and religious activities were not chargeable under Service tax vide various notifications, the rationale behind this exemption was to encourage charitable activities and not burden these activities with tax burden. The similar provisions are also incorporated under Goods and Service Tax, most of the provisions are almost similar with the provisions of Service Tax, like definition of Charitable Services.

Notification No. 12/2017 – Central Tax (Rate) dated 28th June 2017 provides for exemption for Charitable and religious services.

General Exemptions for services

GST on supply of goods by Charitable Trusts: There is no exemption for supply of goods by charitable trusts. Thus any goods supplied by such charitable trusts for consideration shall be liable to GST. For instance, sale of goods shall be chargeable to GST.
As per Notification No.12/2017-Central Tax (Rate) dated 28th June 2017 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

Clause 2(r) of the notification limits “charitable activities” to the following activities for the purpose of getting exemption any other activities will not be entitled to get exemption from payment of GST:

The non-specified supplies whether of goods or sevices, provided by a charitable and religious trust which are not qualified for exemption under GST and will come under the GST net.

1. Renting or conducting religious ceremony:
Entry No.13 of notification no.12/2017-Central Tax (Rate) dated 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 under section 12AA or Section 10(23C)(v) or a body or an authority covered under Section 10 (23BBA) the Income-tax Act:

Limitation on exemption on renting

This exemption shall not be available in the case of the followings:-

(i) renting of rooms where charges are one thousand rupees or more per day;
(ii) renting of premises, community halls, kalyanmandapam or open area, and the like where charges are ten thousand rupees or more per day;
(iii) renting of shops or other spaces for business or commerce where charges are ten thousand rupees or more per month.

Religious place

As per the clause 2 (zy) of the notification “a place which is primarily meant for conduct of prayers or worship pertaining to a religion, meditation, or spirituality”.


As per clause 2(zz) “renting in relation to immovable property” means allowing, permitting or granting access, entry, occupation, use or any such facility, wholly or partly, in an immovable property, with or without the transfer of possession or control of the said immovable property and includes letting, leasing, licensing or other similar arrangements in respect of immovable property;

2. Entry No.80 of notification no.12/2017-Central Tax (Rate), provides the following exemption to an entity registered under Section 12AA.

Services by way of training or coaching in recreational activities relating to-

(a) arts or culture, or
(b) sports by charitable entities registered under section 12AA of the Income-tax Act.

Thus, services provided by way of training or coaching in recreational activities relating to arts or culture or sports by a charitable entity will be exempt from GST.

3. Reverse charge will not be applicable in the case of Import of services:

Entry No. 10 of Notification no.9/2017-Integrated Tax (Rate) dated 28.06.2017, if charitable trusts registered under Section 12AA of Income-tax Act receives any services from provider of services located in non-taxable territory, for charitable purposes, such services received are not chargeable to GST under the reverse charge mechanism.

4. Services by and to Education Institutions (including institutions run by Charitable trusts):

Entry 66 provides for exemption w.r.t. supply by and to educational institutions and only the following services received by eligible educational institution are exempt:

(a) Transportation of students, faculty and staff of the eligible educational institution.
(b) Catering service including any mid-day meals scheme sponsored by the Government.
(c) Security or cleaning or house-keeping services in such educational institution.
(d) Services relating to admission to such institution or conduct of examination.

If such school or other educational institution gives property owned by such institution on rent to others, no exemption will be available for such services. Therefore, all services received by educational institutions managed by charitable trusts (for other than charitable activities, as defined) except those services mentioned above are taxable.

5. GST on arranging yoga and meditation camp by charitable trusts: Charitable trusts organise yoga camps or other fitness camps and they generally are not free for participants, as trusts charge some amount from the participants in the name of accommodation or participation. As the payment/donation are not made for yoga but for accommodation etc., it will be considered commercial activity and it will definitely be covered under the GST.

Reiki, Aerobics etc are not exempted

If charitable trusts organise fitness camps in reiki, aerobics, etc., and receive donation from participants, such income that comes under health and fitness services and will also be taxable.

Running of Public Library by the Trust:

GST on running of public libraries by charitable trusts: No GST will be applicable if charitable trusts are running public libraries and lend books, other publications or knowledge-enhancing content/material from their libraries.

Entry No. 50 of Notification No. 12/2017- Central Tax Rate

If donors of ‘public library remain open to all’ and if it caters to educational, informational and recreational needs of its users and finance for such libraries can be provided from donation, subscription, from special fund created for this purpose or from combination of all such sources, it will be called public library and no GST will be applicable on such services.

GST on hospital managed by charitable trusts: Entry no. 74 of Notification No. 12/2017-Central Tax Rate (applicable to all persons including charitable trusts) exempts healthcare services at clinical establishment, an authorised medical professional or paramedics.

Written by: “GST Blogger ” CS, Senior Manager Taxation

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