GST

on Charitable Trusts, Non-Profit

Organizations and Co-Operative Societies
CA Yashwant J. Kasar
B.Com, FCA, DISA, CISA, PMP, FAIA

Feb 2018
“Supply" includes—
(a) all forms of supply of goods or services or both such as sale, transfer,
barter, exchange, licence, rental, lease or disposal made or agreed to be
made for a consideration by a person in the course or furtherance of
business;
(b) import of services for a consideration whether or not in the course or
furtherance of business;
(c) the activities specified in Schedule I, made or agreed to be made without
a consideration; and
(d) the activities to be treated as supply of goods or supply of services as
referred to in Schedule II.
Excludes –
(a) activities or transactions specified in Schedule III; or
(b) such activities or transactions undertaken by the Central Government, a
State Government or any local authority in which they are engaged as
public authorities, as may be notified by the Government on the
recommendations of the Council

CA YASHWANT J. KASAR 2
“Person" includes—
(a) an individual;
(b) a Hindu Undivided Family;
(c) a company;
(d) a firm;
(e) a Limited Liability Partnership;
(f) an association of persons or a body of individuals, whether incorporated or not, in India or outside India;
(g) any corporation established by or under any Central Act, State Act or Provincial Act or a Government
company as defined in clause (45) of section 2 of the Companies Act, 2013 (18 of 2013) 1;
(h) any body corporate incorporated by or under the laws of a country outside India;
(i) a co-operative society registered under any law relating to co-operative societies;
(j) a local authority;
(k) Central Government or a State Government;
(l) society as defined under the Societies Registration Act, 1860 (21 of 1860);
(m) trust; and
(n) every artificial juridical person, not falling within any of the above;

CA YASHWANT J. KASAR 3
 “Business" includes—
(a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any other
similar activity, whether or not it is for a pecuniary benefit;
(b) any activity or transaction in connection with or incidental or ancillary to sub-clause (a);
(c) any activity or transaction in the nature of sub-clause (a), whether or not there is
volume, frequency, continuity or regularity of such transaction;
(d) supply or acquisition of goods including capital goods and services in connection with
commencement or closure of business;
(e) provision by a club, association, society, or any such body (for a subscription or any
other consideration) of the facilities or benefits to its members;
(f) admission, for a consideration, of persons to any premises;
(g) services supplied by a person as the holder of an office which has been accepted by him
in the course or furtherance of his trade, profession or vocation;
(h) services provided by a race club by way of totalisator or a licence to book maker in such
club; and
(i) any activity or transaction undertaken by the Central Government, a State Government
or any local authority in which they are engaged as public authorities;

CA YASHWANT J. KASAR 4
The provisions relating to taxation of activities of charitable institutions
and religious trusts have been borrowed and carried over from the
erstwhile service tax provisions.
All services provided by such entities are not exempt. In fact, there are
many services that are provided by such entities which would be
within the ambit of GST.

CA YASHWANT J. KASAR 5
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" are
exempt from whole of the GST. Thus as per this notification, 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.

CA YASHWANT J. KASAR 6
Thus, it is essential that the activities must conform to the term “Charitable
Activities”which has been defined in the notification as under "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
alcohol; 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.

CA YASHWANT J. KASAR 7
This notification makes the exemption to charitable trusts available for
charitable activities more specific.
While the income from only those activities listed above is exempt from
GST, income from the activities other than those mentioned above is
taxable.
Thus, there could be many services provided by charitable and
religious trust which are not considered as charitable activities and
hence, such services come under the GST net.
The indicative list of such services could be renting of premises by such
entities, grant of sponsorship and advertising rights during conduct of
events/functions etc.

CA YASHWANT J. KASAR 8
NOTIFICATION NO. 11/2017-CENTRAL TAX (RATE), DATED 28-6-2017, AS AMENDED BY
NOTIFICATION NO. 1/2018-CENTRAL TAX (RATE), DATED 25-1-2018

(iv) Composite supply of works contract as defined in clause (119) of

section 2 of the Central Goods and Services Tax Act, 2017, supplied by
way of construction, erection, commissioning, installation, completion,
fitting out, repair, maintenance, renovation, or alteration of,—
…..
1
[ (g) a building owned by an entity registered under section 12AA of the
Income-tax Act, 1961 (43 of 1961), which is used for carrying out the
activities of providing, centralised cooking or distribution, for mid-day
meals under the mid-day meal scheme sponsored by the Central
Government, State Govern-ment, Union territory or local authorities.]

CA YASHWANT J. KASAR 9
Charitable Healthcare Trusts

CA YASHWANT J. KASAR 10
Human health and social care service
Exemptions are provided vide Notification No. 12/2017-CT (Rates) and
9/2017-IT (This service falls under heading 9993.
Exemption to health care services
Services by way of-
(a) health care services by a clinical establishment, an authorised medical
practitioner or para-medics
(b) services provided by way of transportation of a patient in an
ambulance, other than those specified in (a) above are exempt from GST.
Waste treatment facility to medical establishment
Services provided by operators of the common bio-medical waste
treatment facility to a clinical establishment by way of treatment or disposal
of bio-medical waste or the processes incidental thereto are exempt.

CA YASHWANT J. KASAR 11
Services of cord blood bank
Services provided by the cord blood banks by way of preservation of stem cells or any
other service in relation to such preservation are exempt.

Authorised Medical Practitioner

"Authorised medical practitioner" means a medical practitioner registered with any of
the councils of the recognised system of medicines established or recognised by law in
India and includes a medical professional having the requisite qualification to practice in
any recognised system of medicines in India as per any law for the time being in force -
para 2 of Notification No. 12/2017-CT (Rate) and No. 9/2017-IT (Rate) both dated 28-6-
2017, effective from 1-7-2017.

Clinical Establishment
"Clinical establishment" means a hospital, nursing home, clinic, sanatorium or any
other institution by, whatever name called, that offers services or facilities requiring
diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in
any recognised system of medicines in India, or a place established as an independent
entity or a part of an establishment to carry out diagnostic or investigative services of
diseases - para 2 of Notification No. 12/2017-CT (Rate) and No. 9/2017-IT (Rate) both
dated 28-6-2017, effective from 1-7-2017.

CA YASHWANT J. KASAR 12
Health Care Services

"Health care services" means any service by way of diagnosis or treatment or care
for illness, injury, deformity, abnormality or pregnancy in any recognised system of
medicines in India and includes services by way of transportation of the patient to
and from a clinical establishment, but does not include hair transplant or
cosmetic or plastic surgery, except when undertaken to restore or to reconstruct
anatomy or functions of body affected due to congenital defects, developmental
abnormalities, injury or trauma - para 2 of Notification No. 12/2017-CT (Rate) and
No. 9/2017-IT (Rate) both dated 28-6-2017, effective from 1-7-2017.

CA YASHWANT J. KASAR 13
Circular No. 32/06/2018-GST -Clarifications
(1) Hospitals hire senior doctors/ consultants/ technicians
independently, without any contract of such persons with the patient;
and pay them consultancy charges, without there being any employer-
employee relationship. Will such consultancy charges be exempt from
GST? Will revenue take a stand that they are providing services to
hospitals and not to patients and hence must pay GST?
- Services provided by senior doctors/ consultants/ technicians hired by
the hospitals, whether employees or not, are healthcare services which
are exempt.

CA YASHWANT J. KASAR 14
(2)Retention money: Hospitals charge the patients, say, Rs.10000/-
and pay to the consultants/ technicians only Rs. 7500/- and keep the
balance for providing ancillary services which include nursing care,
infrastructure facilities, paramedic care, emergency services, checking
of temperature, weight, blood pressure etc. Will GST be applicable on
such money retained by the hospitals?
- Healthcare services have been defined to mean any service by way of
diagnosis or treatment or care for illness, injury, deformity, abnormality
or pregnancy in any recognised system of medicines in India[para 2(zg) of
notification No. 12/2017- CT(Rate)]. Therefore, hospitals also provide
healthcare services.
The entire amount charged by them from the patients including the
retention money and the fee/payments made to the doctors etc., is
towards the healthcare services provided by the hospitals to the patients
and is exempt.

CA YASHWANT J. KASAR 15
(3) Food supplied to the patients: Health care services provided by the
clinical establishments will include food supplied to the patients; but
such food may be prepared by the canteens run by the hospitals or
may be outsourced by the Hospitals from outdoor caterers. When
outsourced, there should be no ambiguity that the suppliers shall
charge tax as applicable and hospital will get no ITC. If hospitals have
their own canteens and prepare their own food; then no ITC will be
available on inputs including capital goods and in turn if they supply
food to the doctors and their staff; such supplies, even when not
charged, may be subjected to GST ?

- Food supplied to the in-patients as advised by the doctor/nutritionists

is a part of composite supply of healthcare and not separately taxable.
Other supplies of food by a hospital to patients (not admitted) or their
attendants or visitors are taxable.

CA YASHWANT J. KASAR 16
So, if charitable trusts run a hospital and appoint specialist doctors,
nurses and provide medical services to patients at a concessional rate,
such services are not liable to GST.
If hospitals hire visiting doctors/specialists and these deduct some
money from consultation/visit fees payable to doctors and the
agreement between hospital and consultant doctors is such that some
money is charged for providing services to doctors, there may be GST
on such amount deducted from fees paid to doctors.

CA YASHWANT J. KASAR 17
Charitable Religious Trusts

CA YASHWANT J. KASAR 18
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 as a charitable or religious
trust under section 12AA of the Income-tax Act, 1961 (hereinafter
referred to as the Income-tax Act) or a trust or an institution registered
under sub-clause (v) of clause (23C) of section 10 of the Income-tax Act
or a body or an authority covered under clause (23BBA) of section 10
of the said Income-tax Act:
Provided that nothing contained in entry (b) of this exemption shall
apply to:

CA YASHWANT J. KASAR 19
(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.
Thus, the law gives a limited exemption to renting of only religious precincts or a
religious place meant for general public by the entity registered under section 12AA of
the Income Tax Act. As per clause (zc) of the said notification, the term "general public"
means "the body of people at large sufficiently defined by some common quality of
public or impersonal nature".
The term "religious place" as per the clause (zy) of the said notification means "a place
which is primarily meant for conduct of prayers or worship pertaining to a religion,
meditation, or spirituality". Dictionary meaning of "precincts" is an area within the walls
or perceived boundaries of a particular building or place, an enclosed or clearly defined
area of ground around a cathedral, church, temple, college, etc.

CA YASHWANT J. KASAR 20
This implies that if immovable properties owned by charitable trusts like marriage hall,
convention hall, rest house for pilgrims, shops situated within the premises of a religious
place are rented out, income from letting out of such property is wholly exempt from
GST. But if such properties are not situated in the precincts of a religious place meaning
thereby not within walls or boundary walls of the religious place, income from such
letting out will lose this exemption and income from it will be liable to GST.
Income from a religious ceremony organised by a charitable trust is exempt as per the
above notification. So the income from Navratri functions, other religious functions, and
religious poojas conducted on special occasions like religious festivals by persons so
authorised for this purpose by the charitable or religious trust are exempt from GST.
But a careful perusal of this exemption shows that all income from such a religious
ceremony is not exempt (services other than by way of conduct of religious ceremony
are not exempt). Therefore, the nature of income is an essential factor for ascertaining
whether it will be taxable or exempt. If income loses its religious nature, it is definitely
chargeable to GST. For example, if with regard to Ganeshutsav or other religious
functions, charitable trusts rent out their space to agencies for advertisement
hoardings, income from such advertisement is chargeable to GST, as this will be
considered as income from the advertisement services. Further, if donation for religious
ceremony is received with specific instructions to advertise the name of a donor, such
donation income will be subject to GST. But if donation for religious ceremony is received
without such instructions, it may not be subject to GST.

CA YASHWANT J. KASAR 21
Entry No. 80 of Notification No. 12/2017-Central Tax (Rate)
Similarly, 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.

CA YASHWANT J. KASAR 22
Charitable Educational Trusts

CA YASHWANT J. KASAR 23
Education Services
This service falls under heading 9992.
The commercial education is subject to GST @ 18% (CGST 9% and SGST
9%) or IGST 18%.
Various exemptions are contained in Notification No. 12/2017-CT
(Rates) and 9/2017-IT (Rates) both dated 28-6-2017, effective from 1-7-
2017.

Services provided by education institution

Service supplied by an educational institution to its students, faculty
and staff is exempt from GST.

CA YASHWANT J. KASAR 24
GST on management of
educational institutions by charitable trusts
If trusts are running schools, colleges or any other educational
institutions specifically for abandoned, orphans, homeless children,
physically or mentally abused persons, prisoners or persons over age
of 65 years or above residing in a rural area, such activities will be
considered as charitable activities and income from such supplies will
be wholly exempt from GST.
Meaning of the word rural area defined in said notification is rural area
means the area comprised in a village as defined in land revenue
records excluding the area under any municipal committee, municipal
corporation, town area committee, cantonment board or notified area
committee or any area that may be notified as an urban area by the
Central Government or a State Government.

CA YASHWANT J. KASAR 25
Services by and to Education Institutions (including
institutions run by Charitable trusts)

If the trust is running school for the purpose which is not covered
above (i.e. not coming within the scope of charitable activities as
defined in the notification), income from such activity will not be
exempt under Entry 1 of notification no. 9/2017-lntegrated Tax
(Rate) or 12/2017-Central Tax (Rate), but will be exempt under entry
66 of notification no.12/2017-Central Tax (Rate).
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.

CA YASHWANT J. KASAR 26
66. Services provided –
(a)by an educational institution to its students, faculty and staff;
1
[ (aa)by an educational institution by way of conduct of entrance
examination against consideration in the form of entrance fee; ]
(b)to an educational institution, by way of,-
(i)transportation of students, faculty and staff;
(ii)catering, including any mid-day meals scheme sponsored by the
Central Government, State Government or Union territory;
(iii)security or cleaning or house- keeping services performed in such
educational institution;
(iv)services relating to admission to, or conduct of examination by, such
1
institution; [***]
2
[ (v)supply of online educational journals or periodicals: ]

CA YASHWANT J. KASAR 27
Provided that nothing contained in 3[sub-items (i), (ii) and (iii) of item
(b)] shall apply to an educational institution other than an institution
providing services by way of pre-school education and education up to
higher secondary school or equivalent:
2[Provided further that nothing contained in sub-item (v)of item(b)shall
apply to an institution providing services by way of,—
(i)pre-school education and education up to higher secondary school or
equivalent; or
(ii)education as a part of an approved vocational education course. ]

1. Inserted by Notification No. 2/2018-Central Tax (Rate), dated 25-1-

2018, w.e.f. 25-1-2018.
2. Inserted by Notification No. 2/2018-Central Tax (Rate), dated 25-1-
2018, w.e.f. 25-1-2018.

CA YASHWANT J. KASAR 28
Circular No. 32/06/2018-GST -Clarifications
Is hostel accommodation provided by Trusts to students covered
within the definition of Charitable Activities and thus, exempt under
Sl. No. 1 of notification No. 12/2017-CT (Rate) ?
Hostel accommodation services do not fall within the ambit of
charitable activities as defined in para 2(r) of notification No. 12/2017-
CT(Rate). However, services by a hotel, inn, guest house, club or
campsite, by whatever name called, for residential or lodging purposes,
having declared tariff of a unit of accommodation below one thousand
rupees per day or equivalent are exempt. Thus, accommodation service
in hostels including by Trusts having declared tariff below one thousand
rupees per day is exempt. [Sl. No. 14 of notification No. 12/2017-
CT(Rate) refers]

CA YASHWANT J. KASAR 29
Services supplied by IIM

Services provided by the Indian Institutes of Management, as per the

guidelines of the Central Government, to their students, by way of the
following educational programmes, except Executive Development
Programme –
(a) two year full time Post Graduate Programmes in Management for
the Post Graduate Diploma in Management, to which admissions are
made on the basis of Common Admission Test (CAT) conducted by
the Indian Institute of Management
(b) fellow programme in Management
(c) five year integrated programme in Management

CA YASHWANT J. KASAR 30
Services supplied by National Skill Development Corporation (NSDC)
Services provided by - (a) the National Skill Development Corporation set up by the
Government of India (b) a Sector Skill Council approved by the National Skill
Development Corporation (c) an assessment agency approved by the Sector Skill
Council or the National Skill Development Corporation (d) a training partner
approved by the National Skill Development Corporation or the Sector Skill Council,
in relation to following are exempt
(i) the National Skill Development Programme implemented by the National Skill
Development Corporation; or (ii) a vocational skill development course under the
National Skill Certification and Monetary Reward Scheme; or (iii) any other Scheme
implemented by the National Skill Development - Notification No. 12/2017-CT
(Rate) and No. 9/2017-IT (Rate) both dated 28-6-2017, effective from 1-7-2017.

CA YASHWANT J. KASAR 31
Services of assessment bodies under NSDC
Services of assessing bodies empanelled centrally by the Directorate General of
Training, Ministry of Skill Development and Entrepreneurship by way of assessments
under the Skill Development Initiative Scheme are exempt.

Services under Deen Dayal Upadhyaya Yojana

Services provided by training providers (Project implementation agencies) under
Deen Dayal Upadhyaya Grameen Kaushalya Yojana implemented by the Ministry of
Rural Development, Government of India by way of offering skill or vocational
training courses certified by the National Council for Vocational Training are exempt.

Training programmes where expenditure borne by Central Government -

Services provided to the Central Government, State Government, Union territory
administration under any training programme for which total expenditure is borne
by the Central Government, State Government, Union territory administration are
exempt.

CA YASHWANT J. KASAR 32
Definitions relevant in respect of education
services
"Approved vocational education course" means, -(i) a course run by an
industrial training institute or an industrial training centre affiliated to the
National Council for Vocational Training or State Council for Vocational Training
offering courses in designated trades notified under the Apprentices Act, 1961
or (ii) a Modular Employable Skill Course, approved by the National Council of
Vocational Training, run by a person registered with the Directorate General of
Training, Ministry of Skill Development and Entrepreneurship - para 2 of
Notification No. 12/2017-CT (Rate) and No. 9/2017-IT (Rate) both dated 28-6-
2017, effective from 1-7-2017.
Educational Institution
"Educational institution" means an institution providing services by way of- (i)
pre-school education and education up to higher secondary school or
equivalent (ii) education as a part of a curriculum for obtaining a qualification
recognised by any law for the time being in force (iii) education as a part of an
approved vocational education course - para 2 of Notification No. 12/2017-CT
(Rate) and No. 9/2017-IT (Rate) both dated 28-6-2017, effective from 1-7-2017.

CA YASHWANT J. KASAR 33
GST on Online Educational Services ?

CA YASHWANT J. KASAR 34
Other Services

CA YASHWANT J. KASAR 35
GST on services provided to charitable trusts
Services provided to charitable trusts are not out of ambit of GST. All
services other than those specifically exempted provided to charitable
trusts will be subject to GST.

CA YASHWANT J. KASAR 36
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.

CA YASHWANT J. KASAR 37
Import of Services
Also as per the entry no. 10 of Notification no.9/2017-lntegrated 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.

CA YASHWANT J. KASAR 38
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. 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.

CA YASHWANT J. KASAR 39
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. This activity is specifically
excluded by way of entry No. 50 of Notification No. 12/2017- Central Tax
Rate (and is applicable for everyone, including charitable trusts); which
means services by private libraries are not exempt. Thus, 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.

CA YASHWANT J. KASAR 40
Co-Operative Banks & Credit Societies

CA YASHWANT J. KASAR 41
Banking services fall under heading 9971.
The main service supplied by Banks is of course payment of interest to
depositors.

CA YASHWANT J. KASAR 42
Is Interest subject to GST ?
“Goods" means every kind of movable property other than money and
securities but includes actionable claim, growing crops, grass and things
attached to or forming part of the land which are agreed to be severed
before supply or under a contract of supply;

“Services" means anything other than goods, money and securities but
includes activities relating to the use of money or its conversion by
cash or by any other mode, from one form, currency or denomination,
to another form, currency or denomination for which a separate
consideration is charged;

CA YASHWANT J. KASAR 43
Services by way of— (a) extending deposits, loans or advances in so
far as the consideration is represented by way of interest or discount
(other than interest involved in credit card services) is exempt from
GST - Notification No. 12/2017-CT (Rate) and No. 9/2017-IT (Rate) both
dated 28-6-2017, effective from 1-7-2017.
"Interest" means interest payable in any manner in respect of any
moneys borrowed or debt incurred (including a deposit, claim or other
similar right or obligation) but does not include any service fee or other
charge in respect of the moneys borrowed or debt incurred or in
respect of any credit facility which has not been utilized.

Sale or purchase of foreign exchange among banks or dealers is

exempt
Service of inter se sale or purchase of foreign currency
amongst banks or authorized dealers of foreign exchange or
amongst banks and such dealers is exempt - Notification No. 12/2017-
CT (Rate) and No. 9/2017-IT (Rate) both dated 28-6-2017, effective from
1-7-2017.

CA YASHWANT J. KASAR 44
Exemption to GST on bank charges for cashless transactions upto Rs 2,000
Services by an acquiring bank, to any person in relation to settlement of an
amount upto two thousand rupees in a single transaction transacted
through credit card, debit card, charge card or other payment card service.
"Acquiring bank" means any banking company, financial institution
including non-banking financial company or any other person, who makes
the payment to any person who accepts such card - Notification No.
12/2017-CT (Rate) and No. 9/2017-IT (Rate) both dated 28-6-2017, effective
from 1-7-2017.

Bank, FI, NBFC liable to pay GST under reverse charge in respect of
services received from recovery agent
In case of services supplied by a recovery agent to a banking company or a
financial institution or a non-bankingfinancial company, the recipient of
service i.e. banking company or a financial institution or a non-
bankingfinancial company, located in the taxable territory Notification is
liable to pay GST under reverse charge - No. 13/2017-CT (Rates) and
10/2017-IT (Rates) both dated 28-6-2017, effective from 1-7-2017.

CA YASHWANT J. KASAR 45
Taxability of Services
Taxable Exempt
•DD and Other Commission •Interest
•Loan Processing Charges •Profit on Sale of Investment
•ATM Charges
•Dividend
•Credit Card Interest
•Penal Interest
•Prepayment Charges
•Locker Rent
•Foreign Exchange Charges
•Letter of Credit Charges
•Guarantee Commission
•Entry Fees/ Membership Fees

CA YASHWANT J. KASAR 46
Banking and other financial services within India
The place of supply of banking and other financial services including
stock broking services to any person shall be the location of the
recipient of services on the records of the supplier of services - section
12(12) of IGST Act.
However, if the location of the recipient of services is not on the records
of the supplier of services, the place of supply shall be location of the
supplier of services.

CA YASHWANT J. KASAR 47
Services supplied by Banks to account holders outside
India
In case of services supplied by a banking company, or a financial institution,
or a non-banking financial company, to account holders, the place of supply
shall be the location of the supplier of service - section 13(8)(a) of IGST Act.
Really, this provision is applies only to Indian bank or Financial Institution,
as a foreign bank can never be banking company or Financial Institution as
defined
"Account" means an account bearing interest to the depositor, and includes
a non-resident external account and a non-resident ordinary account -
Explanation (a) to section 13(8) of IGST Act.
"Banking company" has the meaning assigned to it in clause (a) of section
45A of the Reserve Bank of India Act, 1934 - Explanation (b) to section 13(8)
of IGST Act.
[Thus, a foreign Bank providing service from outside India cannot be
'banking company'. Hence, general provision of place of supply of service
will apply i.e. location of recipient of service will be place of supply of
service].

CA YASHWANT J. KASAR 48
ITC: Special provisions in respect of Banks, FI and NBFC
A banking company or a financial institution including a non-banking financial
company, engaged in supplying services by way of accepting deposits,
extending loans or advances shall have the option to either comply with the
provisions of section 17(2) of CGST Act, or avail of, every month, an amount
equal to fifty per cent of the eligible input tax credit on inputs, capital goods
and input services in that month - section 17(4) of CGST Act.
The option once exercised shall not be withdrawn during the remaining part
of the financial year - first proviso to section 17(4) of CGST Act.
The 50% restriction shall not apply to the tax paid on supplies made by one
registered person to another registered person having same PAN number -
second proviso to section 17(4) of CGST Act.
This provision applies when Bank/FI/NBFC in one State provides services (or
supplies goods) to its own branch in another State.
In most of the cases, Bank, FI or NBFC may find it easy and profitable to avail
50% of input tax credit instead of availing input tax credit on proportionate
basis as per section 17(2) of CGST Act.

CA YASHWANT J. KASAR 49
CA YASHWANT J. KASAR 50
Time limit for issuing tax invoice for services
The invoice in case of taxable supply of services, shall be issued within a period of
thirty days from the date of supply of service - Rule 47 of CGST and SGST Rules,
2017.
If the supplier of services is an insurer or a banking company or a financial
institution, or NBFC, invoice can be issued within forty five days from the date of
supply of service - first proviso to Rule 47 of CGST and SGST Rules, 2017.

Relaxations to insurance, Bank, FI, telecom operator and NBFC in issuing invoice for
own branch/division in other States
As per section 25(5) of CGST and SGST Act, if a person (with single PAN) has
establishments in different States, he requires GST registration in each State. Such
establishments in different States are treated as 'distinct persons' for purpose of
CGST and SGST Act.
The establishment in one State may supply service to establishment in another State.
This is particularly in sectors like banking, insurance, NBFC, Financial Institutions and
telecom. In such cases, they may be given relaxation by Government on issue of
invoice either when the supplier records the same in his books or on quarterly basis -
second proviso to Rule 47 of CGST and SGST Rules, 2017.
So far, such notification has not been issued.
Such inter-State invoices and transfers are required as GST is a destination based tax
and tax is to be paid where the services or goods are finally consumed.
CA YASHWANT J. KASAR 51
Tax Invoices issued by Bank, FI, NBFC and insurance company
Tax Invoice issued by Bank, FI, NBFC and insurer may be called by any
other name. It can be made available physically or electronically. It
may not have serial number and address of recipient. However, it
should have other details as specified in rule 46 of CGST and SGST
Rules - Rule 44(2) of CGST and SGST Rules, 2017.
This relaxation shall also apply to Bill of Supply, Receipt Voucher, Refund
Voucher, Payment Voucher, Debit Note, Credit Note and Revised
Invoice.

Invoice of ISD of banking, FI or NBFC - Where the Input Service

Distributor is an office of a banking company or a financial institution or
NBFC, a tax invoice shall include any document in lieu thereof, by
whatever name called, whether or not serially numbered but containing
the information as prescribed above - proviso to Rule 54(1) of CGST and
SGST Rules, 2017.

CA YASHWANT J. KASAR 52
Co-Operative Housing Societies

CA YASHWANT J. KASAR 53
Activity of Housing Society
ØFormation of Society on completion of building
ØAllotment of Share to it’s member
ØContribution from members for maintenance of Building

Whether Exemption is available on this contribution from Member?

CA YASHWANT J. KASAR 54
Services of housing societies or Resident
Welfare Association
This service is 'Home Owners' Association' and falls under service classification
tariff 999598.
Service by an unincorporated body or a non- profit entity registered under any
law for the time being in force, to its own members by way of reimbursement of
charges or share of contribution up to an amount of Rs 7,500 per member for
sourcing of goods or services from a third person for the common use of its
members in a housing society or a residential complex are exempt.
Services provided by housing society or RWA for provision of service which is
exempt from GST
Service by an unincorporated body or a non-profit entity registered under any
law for the time being in force, to its own members by way of reimbursement of
charges or share of contribution for the provision of carrying out any activity
which is exempt from the levy of Goods and Service Tax is exempt [This
provision applies when the housing society or RWA undertakes activity which is
exempt from GST like medical camp, social activities etc.]

CA YASHWANT J. KASAR 55
Whether any Exemption is allowed
to Housing Society
Entry No. 77 of Notification No. 12/2017- Central Tax (Rate)
Service by an unincorporated body or a non-profit entity registered under any
law for the time being in force, to its own members by way of reimbursement of
charges or share of contribution –
(a)as a trade union;
(b)for the provision of carrying out any activity which is exempt from the levy of
Goods and Service Tax; or
1
(c)up to an amount of [seven thousand five hundred] rupees per month per
member for sourcing of goods or services from a third person for the common
use of its members in a housing society or a residential complex.

1. Substituted for "five thousand" by Notification No. 2/2018-Central Tax (Rate),

dated 25-1-2018, w.e.f. 25-1-2018.

CA YASHWANT J. KASAR 56
Case Contribution from Members Other receipts Total Whether Tax
Receipts liable to Payable
in the register on
Upto 7500 Above 7500 Exempted Taxable
Receipts Receipts Financial
Contrib Total Cont Total Eg. Interest Eg. Renting of Year
ution Receipts ribut Receipts Income Tower
ion
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

CA YASHWANT J. KASAR 57
Property Tax

• What about property tax on parking which is sold to member?

As it is separately identifiable for each member, this is pure agent service

• What About Property tax on common area?

Sinking Fund/ Building

• What is Sinking Fund/building fund?

Fund collected for development of building in future

• Whether it is Taxable?
It is used by society in future for its member for development.
Therefore it will be treated as service and will be taxable on receipt
basis.

CA YASHWANT J. KASAR 58
• Whether it is covered for calculating exemption limit?
Yes, as it is contribution from member for common purpose it will be counted
for 7500 limit.

Maintenance and Repair charges

• What is Maintenance and Repair charges?

Maintenance as the a e suggest is the amount collectively reimbursed to the

society to upkeep and maintain the building and premises on regular basis.

• What type of Charges are include in this?

Electricity charges for common areas, watchman or security charges and other
miscellaneous expenses incurred by the society including accounting, audit
etc. is part of maintenance charges.

• Whether it is Taxable?
Yes, subject to to limit of exemption of 7500.

CA YASHWANT J. KASAR 59
Share Transfer Fees

• What is Share and Transfer Fees?

Share transfer fees are the amount charged bythe society for transfer of
shares by member

• Whether it is Taxable?
Yes, it is taxable.
• Whether it is covered for calculating exemption limit?

No, it is not cover in exemption as it is not contribution for sourcing of

service from third person.

CA YASHWANT J. KASAR 60
Non Occupancy Charges

• What is Non occupancy Charges?

Non occupancy charges are charges levied by a housing society only when
a flat or unit is let out by its members

• Whether it is Taxable?

Yes, it is taxable

• Whether it is covered for calculating exemption limit?

No, it is not cover in exemption as it is not contribution for sourcing of
service from third person

CA YASHWANT J. KASAR 61
Parking Charges

• What is Parking Charges?

Charges to regulate the parking place between the members

and providing of space by use of vacant land belonging to the
society for a consideration.

• Whether it is Taxable?
Yes it is purely service and thus it is taxable in Nature.

• Whether it is covered for calculating exemption limit?

No as there is no 3rd person is involved in this service.

CA YASHWANT J. KASAR 62
Water Charges

• What is Water Charges?

the society is not selling the water to its members. It is just providing the
pipeline to deliver water in the enterprises.

• What is role of Society in this?

Billing by Municipal corporation in the name of society and then on some
basis society collect charges from member.

• Whether it is Taxable?
Yes, as it is again contribution from member for common use of its member.
This is taxable subject to limit of exemption of 7500.

• What about common Water used like Swimming Pool?

It is also taxable subject to limit of exemption of 7500.

• What if different meter is provided for each member?

It will fall under pure agent service, so not taxable.

CA YASHWANT J. KASAR 63
Charges for use of club house, swimming Pool, etc
• What is Water Charges?
These are specific services by the society to the member opting for such
facilities.

• Whether it is Taxable?
Yes, subject to exemption limit of Rs. 7500.

Other Transaction
• Rental for Mobile tower
Renting Service Liable to tax at

• Hording charges
Advertisement Charges Liable to Tax

• Use of terrace for function of non member or member

Renting Service Liable to tax

• Interest on default charges

Not covered in exemption as it is not interest on advances. Therefore liable
to tax

CA YASHWANT J. KASAR 64
CA YASHWANT J. KASAR 65
Thank You !

CA Yashwant J. Kasar
B.Com, FCA, DISA, CISA, PMP, FAIA
Cell: +91 98224 88777
Email : yashwant@ykc.co.in

CA YASHWANT J. KASAR 66