1) Whether CHARITABLE TRUST (CT)
are liable to pay ST?
Yes. Refer to charging section
i.e. Section 66B which reads as follow:
’66B. There
shall be levied a tax …. provided ….. by one person to another…….
What is a “person”?
‘Person’ has been defined in
Section 65 B. It includes following entities:
♦ an individual
♦ a Hindu undivided
family
♦ a
company
♦ a society
♦ a limited liability partnership
♦ a
firm
♦
an association or body of individuals, whether incorporated or not
♦ Government
♦ a local authority,
or
As can be seen, the term “person”
is wide and includes Association of Persons whether incorporated or not.
2) Does it mean that CT will
have to pay ST on services provided by it?
Yes. Since section 66D containing
Negative List (NL) is not having any specific reference to services provided by
CT. Hence, services provided by CT are taxable.
3) Whether CT will have to pay
ST on all the types of services provided
by it?
No. For the purpose of
determining tax liability, one will have to refer to Notification No. 25/2012 where under
various types
of services have been declared
exempt.
Clause No. 4 of Notification No.
25/2012 provides as follow:
Services by an
entity registered under section 12AA of the Income tax Act, 1961(43 of 1961) by
way of charitable activities;
As can be seen from above,
exemption granted has two important conditions to be complied with viz. (i) CT
should have been registered under section 12AA of Income Tax Act
(AGA Khan Fondation is registered u/s 12AA of IT Act) and (ii) the activities carried on should be charitable
activities. Thus, all the activities carried on by the CT per se are not exempt.
Exemption granted is restrictive.
4) What are “charitable activities”?
Clause 2(k) of Notification No.
25 / 2012 defines it as follow:
(k)
“charitable activities” means activities relating to -
(i)
public health by way of -
(a) care
or counseling of (i) terminally ill persons or persons with severe
physical or mental disability, (ii) persons afflicted with HIV or AIDS, or (iii)
persons addicted to a dependence-forming substance such as narcotics drugs or
alcohol; or
(b)
public awareness of preventive health, family planning or prevention of HIV infection;
(ii)
advancement of religion or spirituality;
(iii)
advancement of educational programmes or skill development relating to,-
(a)
abandoned, orphaned or homeless children;
(b)
physically or mentally abused and traumatized persons;
(c)
prisoners; or
(d)
persons over the age of 65 years residing in a rural area;
(iv) preservation
of environment including watershed, forests and wildlife; or
(v)
advancement of any other object of general public utility up to a value of,-
(a)
eighteen lakh and seventy five thousand rupees for the year 2012-13 subject to
the condition that total value of such activities had not exceeded twenty five
lakhs rupees during 2011-12;
(b) twenty
five lakh rupees in any other financial year subject to the condition that
total value of such activities had not exceeded twenty five lakhs rupees during
the preceding financial year;
Disclaimer: The above discussion is made for services excluding services which were not falling under Sec.66D (Negative list) & services which were not exempt under Mega exemption no. 25/2012.
