Topic Name -Will giving away essential commodities by a charitable institution be taxable activity under GST
In order to be a supply which is taxable under GST, the transaction should be in the course or furtherance of business. As there is no quid pro quo involved in supply for charitable activities, it is not a supply under GST
What is essential criteria to be Charitable Institution?
The charitable trust or NGO must be registered under Section 12AA of the Income Tax Act, and the services provided by the charitable trust or the NGO must be for a charitable cause.
What is Charitable Activity under GST
Also, exemption is only for ‘Charitable Activities’. As per definition given in the relevant Notification: “(r) “charitable activities” means activities relating to –
(i) public health by way of ,-
(A) care or counseling 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
(B) public awareness of preventive health, family planning or 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 traumatized persons;
(C) prisoners; or
(D) persons over the age of 65 years residing in a rural area;
(iv) preservation of environment including watershed, forests and wildlife;”
As per this definition, charitable activity mainly covers some health related activities, educational related activities, environment preservation activities and activities related to advancement of religion, etc. However, care has to be taken before considering any activity as charitable under this definition. Not all educational or health related activities are covered under this definition.
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About Tabish Ahmad
Tabish Ahmad is an Advocate at Patna High Court works in the area of Corporate Law and Corporate Litigations. Tabish represented many clients in complex legal issues focusing on corporate compliance. As An Advocate it is the duty towards nations to make the citizen and businessmen aware about laws and compliances in order to comply as law abiding citizens.
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