GST on the services provided to charitable trust

This query is : Resolved

Satya Pal (Querist)
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25 June 2020
Kindly suggest if GST is chargeable on security service provided by a Pvt. Ltd. Company to an engineering college run by a Charitable Trust ?
Would the answer differ where Trust is registered under Section 12AA of Income Tax Act ?

Reference of relevant notification/rules/case laws would be appreciated

Thanks

Hemal Makwana

Hemal Makwana (Expert)
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26 June 2020 kindly refer entry 66 of notn. 12/2017. If you qualify in the said entry, you can avail exemption Or else gst will be levied.

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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27 July 2024 ### GST on Services Provided to Charitable Trust

#### **1. **GST on Security Services Provided to Charitable Trust**

**A. General Rule:**

- **Taxability of Security Services:** Security services provided by a private limited company to any entity, including a charitable trust, are subject to GST. The GST rate for security services is **18%** (9% CGST and 9% SGST/UTGST).

- **Charitable Trusts:** The applicability of GST does not change based on the nature of the recipient, whether it is a charitable trust or a regular business. GST is applicable to security services provided to a charitable trust just as it would be for any other organization.

**B. **Charitable Trust Registered Under Section 12AA:**

- **Impact of 12AA Registration:** Charitable trusts registered under Section 12AA of the Income Tax Act are granted certain tax exemptions for income tax purposes. However, this registration does not exempt them from GST on services they receive. The applicability of GST on services provided to such trusts remains the same as for any other entity.

#### **2. **Relevant Notifications and Rules:**

**A. GST on Security Services:**

- **Rate of Tax:** According to the **Notification No. 11/2017-Central Tax (Rate)** dated 28th June 2017, security services are subject to an 18% GST rate (SAC 9971).

- **Exemptions:** There is no specific exemption for security services provided to charitable trusts, even if they are registered under Section 12AA. The exemption provisions generally apply to supplies of goods or services that are specifically mentioned in the GST notifications or rules, and security services are not included in these exemptions.

**B. GST on Services to Charitable Trusts:**

- **General Exemption Notification:** **Notification No. 12/2017-Central Tax (Rate)** dated 28th June 2017 provides a list of exemptions under GST, but security services are not exempted under this notification.

#### **3. **Case Laws and Interpretations:**

- **No Special Exemption:** Courts have generally upheld the position that exemptions under GST are based on specific notifications and not on the nature of the recipient. Therefore, a charitable trust’s exemption from income tax under Section 12AA does not translate into an exemption from GST on the services it receives.

**Summary:**

1. **GST Rate:** Security services provided to a charitable trust are subject to **18% GST**.
2. **Impact of 12AA Registration:** The fact that the trust is registered under Section 12AA of the Income Tax Act does not affect the applicability of GST on services provided to it.

**References:**

- **Notification No. 11/2017-Central Tax (Rate):** Specifies the rate of tax for security services.
- **Notification No. 12/2017-Central Tax (Rate):** Lists exemptions and does not include security services.
- **GST Act:** General provisions on taxability of services.

If you need specific advice tailored to your situation, consulting with a GST professional or tax advisor is recommended.

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