Under the GST Act, 2017, services provided by an unincorporated body or a non-profit entity can be treated differently depending on various factors like the nature of the service, the recipient, and any applicable exemptions. Here’s a breakdown:

Liability to pay GST:

• Generally:Unincorporated bodies and non-profit entities are typically not liable to register under GST Act 2017 unless their aggregate turnover for a financial year exceeds the threshold limit (currently Rs. 40 lakhs for most states). However, this doesn’t mean they are completely exempt from GST Act 2017.
• Specific services: Even if their turnover is below the threshold, they may still need to pay GST on certain services they provide, such as:
  • Services provided for a consideration (payment) other than membership fees.
  • Services provided to persons other than their own members.
  • Services that fall under the reverse charge mechanism (where the recipient of the service is responsible for paying GST).

Exemptions:

The GST Act 2017 provides various exemptions for services provided by unincorporated bodies and non-profit entities, including:

• Charitable activities: Services by an entity registered under Section 12AA of the Income-tax Act for charitable purposes are exempt from GST Act 2017.
• Welfare activities: Services provided by an unincorporated body or a non-profit entity registered under any law for the time being in force, engaged in activities relating to the welfare of industrial or agricultural labour or farmers, or promotion of various activities like trade, commerce, etc., to its own members are exempt from GST, subject to certain conditions.
• Other exemptions :Other specific exemptions may apply depending on the nature of the service and the recipient.

Important points to remember:

• It’s crucial to carefully analyze the nature of the service, the recipient, and any applicable exemptions before determining whether GST Act 2017 is applicable.
• Unincorporated bodies and non-profit entities exceeding the turnover threshold must register under GST Act 2017 and comply with the relevant provisions.
• Consulting with a tax professional is recommended for accurate guidance on your specific situation.

EXAMPLE

The types of services offered by unincorporated bodies or non-profit entities (NPOs) in India can vary greatly depending on their specific focus and location. However, here are some examples of services commonly provided by these organizations in different states:

Andhra Pradesh:

• Educational services: Providing free education to underprivileged children, running vocational training programs, and organizing literacy campaigns.
• Healthcare services: Organizing medical camps in rural areas, providing free or subsidized healthcare to the poor, and raising awareness about health issues.
• Environmental services: Planting trees, promoting sustainable practices like organic farming and waste management, and advocating for environmental protection GST Act 2017.

Karnataka:

• Vocational training: Equipping youth with skills for employment through training programs in areas like tailoring, carpentry, and computer literacy.
• Disability support: Providing assistance to people with disabilities with mobility aids, rehabilitation services, and access to education and employment opportunities GST Act 2017.
• Disaster relief: Offering aid during natural disasters such as floods and earthquakes by providing food, shelter, and medical assistance to affected communities.

Tamil Nadu:

• Cultural preservation: Promoting traditional arts and crafts through workshops, exhibitions, and festivals.
• Animal welfare: Caring for abandoned and injured animals through shelters, veterinary care, and adoption programs.
• Community development: Improving infrastructure and living conditions in villages by providing access to clean water, sanitation, and education.

Kerala:

• Microfinance: Providing small loans to entrepreneurs, particularly women, to start or grow their businesses.
• Women empowerment: Supporting women’s education and economic independence through training programs, skill development initiatives, and access to financial resources GST Act 2017.
• Child welfare: Running orphanages and childcare centers, providing education and healthcare to underprivileged children, and advocating for child rights.

These are just a few examples, and the actual services offered by NPOs can be much more diverse. To find specific NPOs and their services in a particular state in India, you can use online resources such as:

• NGO Darpan: A government of India portal that lists registered NPOs across the country.
• Guide Star India: A platform that provides information on NPOs, including their financial data, governance structure, and programs GST Act 2017.
• Credibility Foundation: An organization that evaluates the credibility and transparency of NPOs in India.

FAQ QUESTIONS

Q: Services by Unincorporated Bodies & Non-Profits under GST Act 2017

Here are some frequently asked questions regarding GST applicability on services provided by unincorporated bodies and non-profit entities under the GST Act 2017:

Q: When are services by an unincorporated body or non-profit entity exempt from GST?

A: Several exemptions exist for services by these entities, depending on the nature of the service and recipient. Some main exemptions include:

• Activities for welfare: Services towards industrial/agricultural labour, farmers, or members for common use (up to ₹7,500/month) are exempt.
• Promotion of public good: activities related to trade, commerce, education, social welfare, environment protection, etc., for its members with membership fees up to ₹1,000/year are exempt.
• Specific services: Public conveniences, healthcare by authorized facilities, skill development initiatives by certain bodies, etc., are also exempt.

Q: Do unincorporated bodies and non-profits ever need to register for GST Act 2017?

A: Yes, if their aggregate turnover exceeds ₹20 lakhs in a financial year, they must register for GST Act 2017. Additionally, if they provide any taxable services not covered by exemptions, registration is mandatory.

Q: What happens if an unincorporated body or non-profit crosses the turnover threshold?

A: They must register for GST Act 2017within 30 days of exceeding the ₹20 lakh limit. After registering, they must comply with GST filing requirements on taxable services provided.

Q: How are GST rates applied to services by these entities?

A: The applicable GST rate depends on the specific service provided. Exempt services have a 0% rate, while taxable services fall under different rate slabs (5%, 12%, 18%, 28%) under GST Act 2017.

CASE LAWS

Case Laws on Services by Unincorporated Bodies/Non-Profits under GST Act 2017

The applicability of GST to services provided by unincorporated bodies or non-profit entities under the Goods and Services Tax Act, 2017 (GST Act 2017) hinges on various factors such as the nature of the services, the purpose of the entity, and whether any consideration (fee, donation, etc.) is received. Several case laws have shed light on these aspects, providing important insights and precedents.

Here are some key case laws to consider:

1. Maharashtra Authority for Advance Ruling (AAR) – (Constituted under section 96 of the Maharashtra Goods and Services Tax GST Act, 2017)

• Ruling: Activities undertaken by a religious trust for advancement of religious teachings through sale of spiritual products (books, CDs, DVDs) and organizing events, even if fees are charged, are not considered business activities and hence not liable to GST Act 2017.

2. Haryana Authority for Advance Ruling (HARAAR)

• Ruling: Security services provided by a Limited Liability Partnership (LLP) registered under the GST Act 2017 are taxable services even though the LLP is a non-profit entity.

3. Advance Ruling No. 31/2018 by West Bengal AAR:

• Ruling: Educational services provided by a non-profit trust registered under Section 12AA of the Income Tax Act are exempt from GST Act 2017 if provided to its students, faculty, or staff.

4. ClearTax – Transactions Treated as Supply under GST Even If Made Without Consideration:

• This article discusses transactions between related parties and activities listed in Schedule I of the GST Act 2017 that are treated as “supply” even if made without consideration, potentially attracting GST liability.

5. Central Goods and Services GST Act, 2017 (12 OF 2017):

• This is the primary legislation governing GST in India and includes definitions of “supply,” “consideration,” and specific exemptions for certain services.

Key Takeaways:

• Unincorporated bodies and non-profit entities may still be liable to GST Act 2017on services provided, depending on the nature of the service, purpose of the entity, and receipt of consideration.
• Case laws provide valuable guidance on interpreting the GST Act 2017 and applying it to specific situations.
• Consulting with a tax professional is recommended for obtaining specific advice regarding GST Act 2017 applicability to your particular situation.