GST on Charitable Trusts & NGOs — Exempt Activities, 12AA/12AB, Religious Institutions

DEPENDS on nature and amount — here's the breakdown: SHOP RENTAL IN TEMPLE COMPLEX: Renting shops to commercial tenants: TAXABLE at 18%. This is COMMERCIAL RENTAL — not charitable/religious activity. Even though temple is 12AA trust: renting shops for commercial profit = taxable supply. Exemption under Entry 1 (charitable) does NOT cover commercial rental. MARRIAGE HALL (KALYANA MANDAPAM): If used primarily for RELIGIOUS ceremonies (Hindu marriage is religious): Argument for EXEMPT: advancement of religion (marriage is religious function). Condition: must be 12AA registered trust + primarily for religious events. If charged at nominal rates (below market) for religious purposes: EXEMPT. BUT if run COMMERCIALLY (market rates, open to all events — corporate, birthday, non-religious): TAXABLE at 18% (commercial rental of immovable property). THRESHOLD CHECK: Aggregate TAXABLE supplies (shops + commercial hall rental): If total > ₹20 lakhs per year: MUST register for GST. If total ≤ ₹20 lakhs: No registration needed (below threshold). EXAMPLE: Temple trust annual revenue: Donations: ₹2 crore (NOT supply — excluded). Hundi collection: ₹50 lakhs (NOT supply). Religious activities: ₹30 lakhs (EXEMPT — Entry 1). Shop rental: ₹15 lakhs (TAXABLE). Marriage hall: ₹12 lakhs (if treated as TAXABLE — commercial). Total taxable: ₹27 lakhs > ₹20L → MUST REGISTER. GST payable: on shop rental (₹15L × 18% = ₹2.7L) + commercial hall (₹12L × 18% = ₹2.16L). If marriage hall is exempt (religious): Total taxable: ₹15 lakhs < ₹20L → NO registration needed. RECOMMENDATION: (1) If marriage hall primarily for religious events + nominal charges: claim exempt. (2) Keep commercial rental (shops) separate in accounts. (3) If combined taxable revenue > ₹20L: register and pay GST only on taxable portions. (4) Donations and religious activities: never taxable (regardless of amount).

LIKELY NO GST — but depends on whether grant is conditional or unconditional: ANALYSIS: (1) UNCONDITIONAL GRANT (government gives money, no specific deliverable): NOT a supply → NO GST. No quid pro quo — government not receiving service from you. You simply use money for your charitable purpose. No GST return filing needed for this income. (2) CONDITIONAL GRANT (government says 'train 500 youth in 6 months'): You ARE providing service (skill training) TO government (or to beneficiaries on government's behalf). This IS a supply (consideration = grant, service = training). BUT: Is it EXEMPT? Check: (a) Entry 1 (charitable activities): Skill development for abandoned/orphaned/homeless children, prisoners, elderly 65+, physically/mentally abused: EXEMPT. General youth (not in vulnerable category): may NOT qualify under Entry 1. (b) Entry 66 (educational institution): If your NGO gives RECOGNIZED qualification (government-recognized certificate): Exempt (educational institution → services to students). If no recognized qualification: NOT exempt under Entry 66. (c) Entry 1 — General public utility: Services of 'general public utility' up to ₹20L/year: EXEMPT. If grant < ₹20L and your activity qualifies as 'general public utility': EXEMPT. If > ₹20L: excess is taxable. (d) Government function (Entry 4): If you are performing function ENTRUSTED by government: Government paying you to perform its constitutional function: May be exempt (services to government — for functions under Eleventh/Twelfth Schedule). Skill development for youth: could be 'education/skill development' under Eleventh Schedule. MOST LIKELY OUTCOME: If your NGO is 12AA/12AB registered: Government-funded skill training for vulnerable groups: EXEMPT (Entry 1). Government-funded general youth training: Exempt up to ₹20L (general public utility). Beyond ₹20L: potentially taxable at 18% (register and pay). But strong argument for full exemption: government function + charitable activity. PRACTICAL: Most NGOs with 12AA registration providing government-funded social programs: treated as exempt. Register for GST only if you have COMMERCIAL income (consulting, rental) > ₹20L.

PRASADAM — GENERALLY EXEMPT. Temple canteen — depends on pricing: (1) PRASADAM — EXEMPT: Prasadam distributed as part of religious function: EXEMPT. Legal basis: advancement of religion/spirituality (Entry 1). It's part of religious ceremony — not a commercial sale of food. Whether free or nominal charge: EXEMPT. Even Tirupati laddu (₹50 per laddu): EXEMPT. Why: intrinsically connected to religious practice (not commercial food sale). The consideration is for participating in religious ritual (not buying food). GST Council has specifically clarified: prasadam = exempt. (2) TEMPLE CANTEEN / ANNA PRASADAM: FREE food (annadanam/langar): NOT SUPPLY (no consideration). No GST (regardless of Entry 1). Even if trust is NOT 12AA: free food = no supply = no GST. Subsidized food (₹10-₹20 per meal): If by 12AA trust as part of religious/charitable activity: EXEMPT. Nominal charges for sustaining the service ≠ commercial activity. It's charitable (feeding devotees at near-zero cost). COMMERCIAL canteen in temple complex (market-rate meals): If operated by trust (12AA) for devotees: May still claim EXEMPT (serving food to pilgrims = charitable activity). If outsourced to restaurant/caterer (third-party runs canteen): Third-party: TAXABLE at 5% (restaurant service) or applicable rate. Trust receives: rental income from third-party (taxable if commercial). (3) PACKAGED PRASADAM (sold outside temple): If temple trust packages prasadam (laddu, peda) and sells through: (a) Temple counter (on-premises): EXEMPT (religious activity). (b) Online (temple website — shipped to donors): LIKELY EXEMPT (extension of religious activity). But: argument for taxable (commercial sale — e-commerce). Currently: most temple trusts treat as exempt (religious function). (c) Sold through RETAIL STORES (supermarket, Amazon): More commercially: may be taxable (goods — food item rate). Counter-argument: still prasadam (religious character doesn't change by sale channel). SAFE POSITION: on-premises + temple website = EXEMPT; external retail = debatable. (4) KEY DISTINCTION — FOOD vs PRASADAM: Prasadam: offered to deity first, then distributed to devotees (religious ritual). Food: general meal (no religious offering involved). If food is NOT offered as prasadam (temple runs general restaurant): It's restaurant service → 5% (without ITC) or 18% (with ITC). If food IS offered as prasadam (religious ritual performed): EXEMPT (advancement of religion — connected to worship). PRACTICAL: Tirupati laddu, Shirdi prasad, temple prasadam (any temple): EXEMPT. Temple mess/canteen feeding pilgrims at subsidized rate: EXEMPT. Temple-owned restaurant with menu, market pricing, general public: May be TAXABLE (5% restaurant service).

NO GST on free medical camps — but understand the full picture: (1) FREE MEDICAL CAMP — NOT A SUPPLY: Your trust provides healthcare FREE to rural patients: NO consideration (patients don't pay). NOT a supply event (Section 7 — supply requires consideration OR deemed supply). No GST regardless of trust status. Even without 12AA: free service = no supply = no GST. (2) CSR DONATION RECEIVED — NOT TAXABLE: Companies giving CSR funds to your trust: DONATION (voluntary contribution for social good). NOT consideration for service (company doesn't receive service from trust). No GST on CSR donation received. Section 7(1)(a): supply must be 'for consideration.' Donation without reciprocal service ≠ consideration. (3) WHERE GST MAY ARISE: (a) Trust PURCHASES medical supplies/equipment: You pay GST on procurement (input GST — 5%/12%/18% on medicines, equipment). Since your OUTPUT is exempt/free: NO ITC available. This input GST becomes COST to your trust. Tip: buy from vendors offering inclusive pricing (GST is your cost anyway). (b) Trust HIRES doctors/consultants: If doctors employed (salary): no GST (employer-employee — not supply). If doctors engaged as independent consultants: They invoice trust: 18% (professional services). Trust pays: ₹18,000 on ₹1,00,000 fee. No ITC for trust (output is exempt). (c) Trust RENTS venue for medical camp: Rental paid by trust: may have GST (18%). No ITC (used for exempt supply). (d) Transport arranged for patients: If trust pays transporter: GST on transport (5%/12%). No ITC for trust. ALL input GST: COST to trust (cannot recover through ITC). (4) CSR COMPANY — ITC ON CSR SPENDING: Company that gives CSR: (a) If company donates MONEY to trust: no GST event for company. (b) If company directly procures goods/services for CSR activity: Company pays GST on procurement. ITC? DEBATABLE: Some courts: ITC allowed (CSR is legal obligation under Companies Act = business expenditure). Conservative: ITC blocked (not in 'course or furtherance of business' directly). Post-2023: trend towards allowing ITC on CSR (Section 135 mandate = business necessity). Check: latest circular/AAR on ITC for CSR. (5) REPORTING: Trust: no GST filing for free medical camps (no supply). Trust: file GST returns ONLY if registered (for other taxable activities like rental). CSR company: report CSR donation as 'not supply' (no GST return treatment). SUMMARY: Medical camp (free): No GST (not supply). CSR donation received: No GST (not consideration). Input GST (purchases): Cost to trust (no ITC). Hired professionals: Their GST is trust's cost.