PRIVATE CHARITABLE TRUST

[Sanjeev Agrawal]

Dear All Learned Members,
I wanted to know the complete tax mechanism in gst in case where government grants are received by private charitable trust for cultural event either under reverse charge or forward charge

[KASTURI SETHI]

Dear Querist,

Can you elaborate your query ? Correct and concrete reply is not possible without full facts and circumstances. 

[Sanjeev Agrawal]

Sir,

Actually the assessee trust is private charitable AOP trust for last 41 years. Its main activity has been to conduct yearly exhibitions in which it gives various shopkeepers and like businessmen shops on rent for a temporary period during which the exhibition is on. It also conducts cultural and entertainment prgrammes such as Kavi Sammelan and Bollywood Night in which various Artists perform and thereby charge their fees from the trust. Last year the trust had called with the help of District Administration famous Bollywood playback singer and internationally acclaimed poets for entertainment programmes. For paying them they have received government grant from the State Government. Now the issue is whether this grant is taxable under GST either in the hands of the government under reverse charge or in the hands of trust under forward charge in the GST law.

Thanks

[KASTURI SETHI]

(i) There is no difference between the terms, 'grant-in-aid' and 'subsidy'. In this context, see Section 15 (2) (e) of CGST Act, 2017. Subsidies provided by Central Govt. and State Govts are excluded from the value of supply. Thus the grants (subsidies) are not subject to tax as there is no consideration.

(ii) However, there should be no commercial gain. If the charitable trust takes any commercial gain from that subsidy (grant), then that subsidy will be subject to tax.

[KASTURI SETHI]

In order to understand the concept of subsidy/grant and taxability, go through the following decision :-

IN RE : JAYSHANKAR GRAMIN AND ADIVASI VIKAS SANSTHA - 2022 (10) TMI 309 - APPELLATE AUTHORITY FOR ADVANCE RULING, MAHARASHTRA

 

[Shilpi Jain]

If it is an unconditional grant then possibility to state that no GST liability.

Need to know if there are any conditions and terms associated with the grants.

AI Summary

Government grants exclusion from GST applies unless the grant confers a commercial gain making it taxable.
Subsidies/grants provided by Central and State governments are excluded from the value of supply under Section 15(2)(e) of the CGST Act and thus are not taxable as they do not constitute consideration; however, if the grant confers a commercial gain to the trust or functions as payment for services, it may be treated as taxable value, and the specific terms and conditions of the grant must be examined to determine GST liability.