CH.SUDHEER C.A, C.M.

A DAY 9 Service Wise Clarification

SERVICE WISE
Chapter 9 CLARIFICATION

1. CHARITABLE AND RELIGIOUS ACTIVITY RELATED SERVICES

1 Services by an entity registered u/s 12AA of the Income-tax Act, 1961 by way of charitable
activities.

In order to claim exemption under Entry 1 of the Notification, following two conditions must
be satisfied

The entity is registered under The entity carries out one or

section 12AA of the Income more of the specified
tax Act, 1961, and charitable activities.

Meaning of term ‘charitable activities’ Activities relating to-

(i) PUBLIC HEALTH (ii) ADVANCEMENT (iii) ADVANCEMENT (iv)

by way of- OF RELIGION, OF EDUCATIONAL PRESERVATION OF
spirituality or yoga; PROGRAMMES/SKILL ENVIRONMENT
DEVELOPMENT including
(A) Care or counseling of relating to,-
watershed, forests
(I) Terminally ill persons or persons & wildlife.
with severe physical or mental
disability;

(II) Persons afflicted with HIV or AIDS;

(A) (B) (C) (D) Persons
(III) Persons addicted to a dependence- Abandoned Physically or Prisoners; over the
forming substance such as narcotics
, orphaned mentally or age of 65
drugs or alcohol; or
or abused and years
(B) Public awareness of preventive homeless traumatized residing in
health, family planning or prevention children; persons a rural area
of HIV infection;

SUDHEER TAX CLASSES, CONTACT: 8688398888 - 9491780817 9.1

 CH.SUDHEER C.A, C.M.A DAY 9 Service Wise Clarification

Liability to pay GST

There could be many services provided by charitable and religious trusts - registered under section
12AA of the Income-tax Act, 1961 - which are not covered by the definition of charitable activities
and hence, such services would attract GST

For instance, grant of advertising rights to a person on the premises of the charitable/religious
trust or on publications of the trust, or granting admission to events, functions, celebrations,
shows against admission tickets or fee etc. would attract GST.

Arranging yoga and meditation camp by charitable trusts

Residential programmes or camps where the fee charged includes cost of lodging and boarding
shall 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.

However, 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. Similarly, activities such as holding of fitness camps or classes such as those in aerobics,
dance, music etc. will be taxable.

Services by an old age home run by:

9D Central Government, State Government or

an entity registered under section 12AA of the Income-tax Act, 1961
to its residents (aged 60 years or more) against consideration upto ₹ 25,000 per month per
member, provided that the consideration charged is inclusive of charges for boarding, lodging
and maintenance.

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 by charitable or religious
trust under section 12AA / 10(23C)(v) / 10(23BBA) of Income Tax act
Exception to point (b)

However, nothing contained in entry (b) of this exemption shall apply to-
13

(i) Renting of (ii) Renting of premises, (iii) Renting of shops or

rooms where community halls, other spaces for business or
charges are ` kalyanmandapam or open area, commerce where charges
1,000 or more per and the like where charges are
are 10,000 or more p.m
day; 10,000 or more per day;

SUDHEER TAX CLASSES, CONTACT: 8688398888 - 9491780817 9.2

 CH.SUDHEER C.A, C.M.A DAY 9 Service Wise Clarification

Religious place means
a place which is
primarily meant for
conduct of prayers or
worship pertaining to a
religion, meditation, or
spirituality.
Religious ceremonies
are life-cycle rituals
including special
General public means The exemption is religious poojas
the body of people at applicable to conducted in terms of
large sufficiently renting of precincts religious texts by a
defined by some of religious places person so authorized
common quality of of all religions. by such religious texts.
public or impersonal
Occasions like birth,
nature
marriage, and death
involve elaborate
religious ceremonies.

60 Services by a specified organization in respect of a religious pilgrimage facilitated by the

Government of India, under bilateral arrangement.

Religious yatras or pilgrimage

Religious Yatras/pilgrimage Only such services of religious The term specified

organised by any charitable or pilgrimage as are provided by organization means
religious trust are not exempt. specified organization in - Kumaon Mandal Vikas Nigam
Further, services of respect of a religious Limited (KMVN), a Government
transportation of passengers pilgrimage facilitated by the of Uttarakhand Undertaking;
for a pilgrimage by the Government of India (GoI), or
charitable trust are not exempt under bilateral arrangement,
from GST. are exempt from GST. - State Haj Committee
including Joint State
Committee

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

(a) Arts or culture, or
80 (b) Sports
(c) By charitable entities registered under section 12AA of the Income-tax Act.

Recreational activities mean all forms of dance, music, painting, sculpture making, theatre and
sports etc..,

SUDHEER TAX CLASSES, CONTACT: 8688398888 - 9491780817 9.3

 CH.SUDHEER C.A, C.M.A DAY 9 Service Wise Clarification

Services provided
GST on services to charitable or
provided TO religious trusts are
charitable trusts not outside the
ambit of GST.

Unless specifically
exempted, all goods and
services supplied to
charitable or religious
trusts are leviable to GST.

2. AGRICULTURE RELATED SERVICES

Services relating to cultivation of plants and rearing of all life forms of animals,
except the rearing of horses, for food, fibre, fuel, raw material or other similar
products or agricultural produce by way of—

(a) agricultural operations directly related to production of any agricultural

produce including cultivation, harvesting, threshing, plant protection or testing;

(b) supply of farm labour;

(c) processes carried out at an agricultural farm including tending, pruning,

cutting, harvesting, drying, cleaning, trimming, sun drying, fumigating, curing,
sorting, grading, cooling or bulk packaging and such like operations which do not
alter the essential characteristics of agricultural produce but make it only
54 marketable for the primary market;

(d) renting or leasing of agro machinery or vacant land with or without a

structure incidental to its use;

(e) loading, unloading, packing, storage or warehousing of agricultural produce;

(f) agricultural extension services;

(g) Services by any Agricultural Produce Marketing Committee or Board or

services provided by a commission agent for sale or purchase of agricultural
produce.

SUDHEER TAX CLASSES, CONTACT: 8688398888 - 9491780817 9.4

 CH.SUDHEER C.A, C.M.A DAY 9 Service Wise Clarification

Entry 54 include activities like breeding of fish Further, the term ‘agricultural produce’ means
(pisciculture), rearing of silk worms (sericulture), any produce out of cultivation of plants and
cultivation of ornamental flowers (floriculture) rearing of all life forms of animals, except the
and horticulture, forestry, etc. rearing of horses

Entry 54
Thus, in terms of the definition of agricultural
produce, following processes are liable to GST:-
(a) Process which alters the essential
characteristics of the agricultural produce: For
instance, potato chips or tomato ketchup are
manufactured through processes which alter the
essential characteristic of farm produce
(potatoes and tomatoes in this case)
(b) Process which makes agricultural produce
marketable in the retail market: The processes
of grinding, sterilizing, extraction packaging in
retail packs of agricultural products, which make
the agricultural products marketable in retail
market, would NOT be covered in this entry. Only
such processes are covered in this entry which
makes agricultural produce marketable in the
primary market.

Warehousing of agriculture produce

Item (e) of the entry exempts loading, unloading, packing, storage or warehousing of agricultural
produce. In this regard, following are not agricultural Produce & warehousing of following items
were liable to GST

Processed Tea
and coffee

Jaggery

Pulses
(dehusked or
split)
processed
dry fruits

processed
cashew nuts

However, whole pulse grains such as whole gram, rajma etc. are covered in the definition of
agricultural produce.

SUDHEER TAX CLASSES, CONTACT: 8688398888 - 9491780817 9.5

 CH.SUDHEER C.A, C.M.A DAY 9 Service Wise Clarification

Custom milling of paddy into rice

Milling of paddy into rice also changes its essential

characteristics. Hence it is chargeable to GST

Classification of leguminous vegetables when subject to mild heat treatment

(parching)

Leguminous vegetables which Such goods if branded and In all other cases such goods
are subjected to mere heat packed in a unit container would be exempted from GST
treatment for removing would attract GST at the rate
moisture, or for softening and of 5%
puffing or removing the skin,
and not subjecting to any
other processing or addition
of any other ingredients such
as salt and oil.

Entry No. Description of services

24 Services by way of loading, unloading, packing, storage or warehousing of rice.

24A Services by way of warehousing of minor forest produce.

24B Services by way of storage or warehousing of cereals, pulses, fruits, nuts and
vegetables, spices, copra, sugarcane, jaggery, raw vegetable fibres such as cotton, flax,
jute etc., indigo, unmanufactured tobacco, betel leaves, tendu leaves, coffee and tea

53A Services by way of fumigation in a warehouse of agricultural produce.

55 Carrying out an intermediate production process as job work in relation to cultivation of

plants and rearing of all life forms of animals, except the rearing of horses, for food,
fibre, fuel, raw material or other similar products or agricultural produce.

55A Services by way of artificial insemination of livestock (other than horses).

SUDHEER TAX CLASSES, CONTACT: 8688398888 - 9491780817 9.6

 CH.SUDHEER C.A, C.M.A DAY 9 Service Wise Clarification

EDUCATIONAL INSTITUTION
Taxability Input services (Entry 66(b))

I. Transport of Students, Faculty,

Educational All are exempt
For (a)-exempt II. Catering (incl. midday meals
Institute Under Entry 66(a)

III. Security/Cleaning/House Keeping Input service Output service

For (a) (b) (c)

exempt IV. Conduct of examination a) Preschool & Higher
Secondary (or) Equal
a) School Fee
For (b)-exempt V. Online Education Journals b) As part of curriculum b) Bus Fee
Recognized by Indian law c) Application Fee
d) Tuition Fee
c) Approved Vocational courses
e) Entrance Fee
Taxable for all VI. Any other services
-MESC f) Exam Fee
g) Hostel Fee
- ITI / ITC
Note h) Admission Fee
i) Fines, Penalties
j) Uniform Fee
Output service by IIM k) Books fees
2 years full time post graduation – Exempt
(Entry 67) l) Co circular activities Fee
Executive Development programme- Taxable
5 years Integrated programme- Exempt
(Indian Institute of Management)
Fellow programme in Management- Exempt
Note: Training of courses recognized by foreign law is Taxable

SUDHEER TAX CLASSES, CONTACT: 8688398888 - 9491780817 9.7

 CH.SUDHEER C.A, C.M.A DAY 9 Service Wise Clarification

3. EDUCATION SERVICES

Composite and mixed supply in so far

as education is concerned

 Boarding schools – Composite supply- Exempt

 Course in a college leads to dual qualification only one of which is recognized by law-
Mixed Supply- highest rate of tax to be paid on entire value
 However, incidental auxiliary courses provided by way of hobby classes or extra-
curricular activities in furtherance of overall well-being will be an example of naturally
bundled course, and therefore treated as composite supply.
One relevant consideration in such cases will be the amount of extra billing being done for
the unrecognized component viz-a-viz the recognized course. If extra billing is being done,
it may be a case of artificial bundling of two different supplies, not supplied together in the
ordinary course of business, and therefore will be treated as a mixed supply, attracting the
rate of the higher taxed component for the entire consideration.

Supply of
food in a
mess or
canteen

If the catering services is one of the services provided by an educational institution to its
students, faculty and staff and the said educational institution is covered by the definition of
‘educational institution’ as given above, then the same is exempt
If the catering services, i.e., supply of food or drink in a mess or canteen, is provided by anyone
other than the educational institution, i.e. the institution outsources the catering activity to an
outside contractor, then it is a supply of service to the concerned educational institution by such
outside caterer and attracts GST
Note: It may be noted that said services when provided to an educational institution providing
pre-school education or education up to higher secondary school or equivalent are exempt from
tax.
Fees charged from prospective employers (i.e., Campus placement Fee)
Educational institutes such as IITs, IIMs charge a fee from prospective employers like corporate
houses/MNCs, who come to the institutes for recruiting candidates through campus interviews
in relation to campus recruitments. Such services shall also be liable to tax

SUDHEER TAX CLASSES, CONTACT: 8688398888 - 9491780817 9.8

 CH.SUDHEER C.A, C.M.A DAY 9 Service Wise Clarification

4. HEALTH CARE SERVICES

74 Services by way of-

a. Health care services by a clinical establishment, an authorized 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.

Health care services

Means any service by way Includes services by way Does not include hair
of diagnosis or treatment of transportation of the transplant or cosmetic or
or care for illness, injury, patient to and from a plastic surgery, except when
deformity, abnormality or clinical establishment, undertaken to restore or to
pregnancy in any but reconstruct anatomy or
recognized system of functions of body affected due
medicines in India to congenital defects,
developmental abnormalities,
injury or trauma

As it is apparent from the definition of health care services, only services in recognized systems of
medicines in India are exempt under this entry. Following systems of medicines are the recognized
systems of medicines in India8:-

Any other
Allopathy system of
medicine that
Yoga may be
recognized by
C. Govt.

Recognized
Naturopathy systems Unani

Siddha
Ayurveda
Homeopat
hy

SUDHEER TAX CLASSES, CONTACT: 8688398888 - 9491780817 9.9

 CH.SUDHEER C.A, C.M.A DAY 9 Service Wise Clarification

Rent of rooms • Rent of rooms provided to in-patients in hospitals

provided to in- is exempt [Circular No. 27/01/2018 GST dated
patients 04.01.2018].

Food supplied to the patients

Food supplied to the in- Other supplies of food by a

patients as advised by the hospital to patients (not
doctor/nutritionists is a admitted) or their attendants
part of composite supply or visitors are taxable
of healthcare and not [Circular No. 32/06/2018 GST
separately taxable. dated 12.02.2018].

Services other than health care services in clinical establishment’s premises Supply of services
other than healthcare services such as renting of shops, auditoriums in the premises of the clinical
establishment, display of advertisements etc. will be subject to GST.

Entry Description of services

No.
46 Services by a veterinary clinic in relation to health care of animals or birds.
73 Services provided by the cord blood banks by way of preservation of stem cells or any
other service in relation to such preservation.
74A Services provided by rehabilitation professionals recognized under the Rehabilitation
Council of India Act, 1992 (34 of 1992) at
75 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.

SUDHEER TAX CLASSES, CONTACT: 8688398888 - 9491780817 9.10