GST on Donation

[Navy G]

Suppose a company is receiving donations from its employees/staff in lieu of COVID-19 and these proceeds are utilized to provide food and other groceries to staff members of housekeeping or security. So will receipt of donation from employees attract any GST?

[KASTURI SETHI]

The definition of 'goods' and 'services' specifically excludes money.

As per Section 2 (52) of CGST Act“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;

As per Section 2(102)of CGST Act “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.

Monetary donations without any "favour for favour" in return cannot be considered as supply of any goods or services. Hence out of definition of the scope of supply. No GST is applicable on such monetary donation.

[Rachit Agarwal]

Donation amount has been received for providing food and other groceries to staff members. Supply of food to security for which consideration has been received from employees. The same is taxable.

However plea may be taken, the company is acting as pure agent on behalf of the employees. In this case amount received from employees to co-related with the exact amount utilized for the purpose of distribution. Surplus if any to be given back to employees and extra expenditure incurred to be received from employees.

Exemption has been provided for the services provided by an entity registered u/s 12AA for charitable purpose and not any other entity. It is a settled law that exemption where have been provided has to be strictly applied and followed and benefit of doubt if any will be in favour of revenue.

[YAGAY andSUN]

For details you may refer following article on this matter.

Donations given to combat COVID-19: GST perspectivehttps://www.taxtmi.com/article/detailed?id=9077

[Mahadev R]

I also agree with Kasthuri Sir. As there is no supply in return to the person who donates and it is also not clear who is the beneficiary, such donation cannot be treated as supply.

AI Summary

Donations not supply: voluntary monetary donations without quid pro quo are not subject to GST; payments for food may be taxable. Voluntary monetary donations without any quid pro quo do not fall within the definitions of goods or services and therefore are not taxable under GST; however, amounts that represent consideration for provision of food or groceries constitute a taxable supply. A 'pure agent' defence may be available if receipts are exactly correlated with disbursements and surplus is returned. Charitable exemptions apply only to properly registered charitable entities and must be strictly construed.