Notification No.12/2017-Central Tax (Rate) dated 28th June 2017 exempts services provided by entity registered under Section 12AA of the Income-tax Act, 1961 by way of charitable activities from whole of GST vide entry No. 1 of the notification, which specifies that:-
“services by an entity registered under Section 12AA of Income-tax Act, 1961 by way of charitable activities”
As per definition of ‘Charitable Activities’ under this notification, one of the entry is :
“advancement of religion, spirituality or yoga;”
Thus it is implied that any trust or society registered under Section 12AA of Income Tax Act, 1961 and is providing service in the nature of advancement of religion, spirituality or yoga is an exempt service.
Further, Certain representations were received by CBIC seeking clarification as regards to applicability of GST on residential programmes or camps meant for advancement of religion, spirituality or yoga where the fee charged includes the cost of boarding and lodging.
CBIC recently issued CIRCULAR-66/40/2018-GST to clarify this extended query where fee charged includes the cost of boarding and lodging of participant. Followings are the clarifications issued in the circular:-
Services would be exempt where:
Fee or consideration charged in any other form from the participants for participating in a religious, Yoga or meditation programme or camp meant for advancement of religion, spirituality or yoga shall be exempt.
Residential programmes or camps where the fee charged includes cost of lodging and boarding shall also be exempt as long as the primary and predominant activity, objective and purpose of such residential programmes or camps is advancement of religion, spirituality or yoga.
Services would NOT be exempt where:
If charitable or religious trusts merely or primarily provide accommodation or serve food and drinks against consideration in any form including donation, such activities will be taxable.
If trusts are arranging residential or non-residential yoga camps by receiving donation or other charges from the participants, these will not be considered charitable activities (as it is different from advancement of religion, spirituality or yoga). Since donation is received for participation, it will be considered commercial activity and it will definitely be covered under the GST.
Similarly, 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.
Crux
If main activity of trust is “advancement of religion, spirituality or yoga”, and they set up residential programmes, then this activity will be an exempt activity.
However, if a trust is just arranging or organising the camp for “religion, spirituality or yoga”, it will remain taxable.
