Payment of GST by Charitable Trust

[Arunachalam M]

Dear Experts,

I request the experts to kindly clarify, whether a Registered Charitable Trust which got 12AA exemption from Income Tax is liable to pay GST on account of constructing a trust building.

Any exemption is available for non payment of the GST to the builder.

An early reply will be helpful in this regard.

Thanks in advance,

Regards,

ArunachalamM

[Shilpi Jain]

No exemption available. Would require to pay GST.

[Arunachalam M]

The Exemption Notification No. 12/2017 (Central Tax Rate) dated 28th June, 2017, it is meant for Supply of Services alone, and not for payment of GST??

[Krishna Murthy]

The above exemption is only with regard to Charitable Activities under taken by the 12AA Trust . In other words the Trust is supplier of service in such a case and the same is exempted. But when the the trust is constructing building then the supplier of works contract service is the person who constructs the building and not the trust. The trust is the recipient of service in this case. Hence, the above exemption is not applicable in the present situation.

[KASTURI SETHI]

Exemption is not available. Otherwise also construction service is out of the definition of 'charitable activities' under Para 2-Definitions (r) of the Notification itself.

[YAGAY and SUN]

We endorse the views of experts.

AI Summary

GST on construction by charitable trusts: GST applies; charitable activity exemption does not cover construction services.
The exemption for charitable activities covers supplies made by the trust but does not apply to construction: when a trust commissions a building the trust is the recipient and the builder is the supplier of works contract services, who is liable for GST; construction services are excluded from the charitable activities exemption and thus no general GST exemption prevents payment to the builder.