Levy of GST on Display of name at the Charitable Institution Premises

Levy of GST on Display of name at the Charitable Institution Premises It is a old age practice specifically in Indian society to donate for the sake of benefit of the society at large. It may be in form of  donation to religious, charitable, medical, hospital, educational institutions, orphanage, old age homes etc. With the passage of time some peoples are taking the benefit of this donation in the form of advertisement of their business activities and this is  some thing for which the government has come with the circular (Circular No. 116/35/2019-GST, dated 11^th October, 2019) clarifying what is chargeable under GST and otherwise. The clear purpose of the government to issue the circular in this regard so that the  no confusion would arise in the minds of donor who have no commercial  interest in the donation. The notification places three conditions for getting such donation out of the ambit of the supply are :

• The gift must be made to charitable organization.
• The payment has the character of gift or donation
• The purpose is philanthropic (i.e. it leads to no commercial gain) and not advertisement.

It is pertinent to mention here that the this relief is given only for the individual donors and not otherwise  ( refer the subject of the circular ). [caption id="attachment_87284" align="aligncenter" width="640"] Levy of GST on Display of name at the Charitable Institution Premises[/caption] To clarify the issue prominently the circular gives various examples regarding what is not taxable supply. If we analyse the examples, one thing is very much clear that any mention of the business will make the donation taxable. Let us take an example. If Mr. X, a chartered accountant by profession, donated the sum of Rs. 10,000/- to a charitable organization and his name  displayed upon the name board / plate of the organisation : Situation-1: “Donated by Mr. X – No supply Situation-2: “Donated by Mr. X, Chartered Accountant – Supply The addition of word Chartered Accountant is some how indicates the business profile of the person and therefore in my opinion it will be covered under supply. The main reason behind the taxability or the non taxability  of the above mentioned transaction is the definition of “Supply” as given under section 7 of the CGST Act, 2017 and which clearly spelt out that  for any thing to be covered under the supply the furtherance of the business is necessary. The law is as under: Section 7: scope of supply (1) For the purposes of this Act, the expression 'supply' includes''

• all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business;

In the first part of the example nothing is to show the furtherance of the business and in the second part the use of the word / designation Chartered Accountant clearly gives indication of furtherance of the business. If we take another example, Donated by Mr. Y, I.A.S.. In the instant case even if the designation is used but its no where showing the furtherance of the business therefore no supply. Therefore to conclude the issue we can firmly say that the key concept of the taxability is the furtherance of the business. This article is an endeavor to share some learnings obtained. The views expressed are of the author and are intended solely for informational purpose only.   Though due care is taken while preparing the document, possibility of errors cannot be ruled out. Expert guidance, where required and  reference to the original act, notification, circular, rules etc is highly recommended. (About the author – The author is a member of ICAI and can be reached at Email: [email protected] ,  Mobile: 09936424523,, Twitter : @CA_NikhilKumar,  FB: canikhillko  Office: Flat No. 102, First Floor, Vasundhra Complex, Ring Road, Sector-16, Indira Nagar, Lucknow-226016, U.P., India  )