GST on renting of property to 12AAA registerd educational Institution

[Noor Beg]

I have my property rented to an govt approved maritime Insititute engaged in Govt approved courses mandatory by the Govt registered under charitable trust and having IT exmption 12AAA.

will educational Institution pay GST to me for paying to govt.

. it was not paying service tax till october 2016. in ocotber 2016 i started applying service tax but now I receive a claim from educational institution saying they were/ are not liable to pay either service tax nor GST.
please clarify thanks and Brgds Capt.Beg

[KASTURI SETHI]

No exemption available to you for this service.

[KASTURI SETHI]

You will have to pay GST from your own pocket by treating amount of rent as cum -tax taxable value

[KASTURI SETHI]

If you are registered as charitable under Income Tax Act but engaged in commercial activity you are out of definition of charitable. Hence not eligible for exemption.

[Ganeshan Kalyani]

I agree with Sri Kasturi Sir.

[KASTURI SETHI]

Dear Querist,

Your chapter is not closed here. Definitions of Charitable' and'Commercial Activity' under the Income Tax Act is not applicable to GST Acts. Income Tax is direct tax and GST is indirect tax. Both are not linked for the purpose of l applicable of GST. In pre-GST era, both these definitions were different in both Acts. You must go through this circular:

GST on Charitable and Religious Trusts

 

[KASTURI SETHI]

Definition of commercial activity pertaining to the period prior to 1.7.12 which is relevant as per statute :

Relevant para of Circular No. 107/1/2009-S.T., dated 28-1-2009

F.No. 137/23/2007-CX.4

2. Commercial Nature of Institute

The first issue arises from the very name i.e. Commercial ‘training or coaching center’. Many service providers argue that the word commercial appearing in the aforementioned phrase, suggests that to fall under this definition, the establishment or the institute must be commercial (i.e. having profit motive) in nature. It is argued that institutes which are run by charitable trusts or on no-profit basis would not fall within the phrase ‘commercial training or coaching center’ and none of their activities would fall under the taxable service. This argument is clearly erroneous. As the phrase ‘commercial training or coaching center’ has been defined in a statute, there is no scope to add or delete words while interpreting the same. The definition commercial training or coaching center has no mention that such institute must have ‘commercial’ (i.e. profit making) intent or motive. Therefore, there is no reason to give a restricted meaning to the phrase. Secondly, service tax, unlike direct taxes, is chargeable on the gross amount received towards the service charges, irrespective of whether the venture is ‘profit making, loss making or charity oriented’ in its motive or its outcome. The word “Commercial” used in the phrase is with reference to the activity of training or coaching and not to the nature or activity of the institute providing the training or coaching. Thus, services provided by all institutes or establishments, which fulfills the requirements of definition, are leviable to service tax.

AI Summary

GST liability on rent: charitable income-tax registration does not exempt rental services from GST liability. GST applies to rental services provided to an institution holding Income Tax 12AAA exemption; the institution's charitable registration under the Income Tax Act does not by itself exempt the landlord from GST. Indirect-tax definitions focus on the nature of the activity rather than profit motive, so services meeting the statutory definition of a taxable supply remain taxable unless a specific GST exemption applies.