Clarification on GST Applicability for Donations and Acknowledgements in Charitable Institutions
<p>The Ministry of Finance, through Circular No. 116/35/2019-GST, provided clarification on the Goods and Services Tax (GST) applicability to donations and gifts received by charitable organizations. Specifically, the circular addresses the GST implications for displaying donor names or placing nameplates as a gesture of gratitude.</p><p><strong>Key Highlights:</strong></p><ul><li><strong>GST Exemption on Donations:</strong> The circular clarifies that if a charitable organization places a nameplate or acknowledgement for a donor, as a gesture of gratitude and not for commercial advertising, there is no GST liability. The display of the donor's name is considered a public recognition of philanthropy, not an advertisement for the donor's business.</li><li><strong>No Consideration for Service:</strong> The acknowledgement in the form of a nameplate or plaque does not qualify as a "supply of service" under GST since there is no "quid pro quo" (exchange or service for donation). The charitable institution does not have any obligation to provide something in return for the donation.</li><li><strong>Examples of Non-Taxable Cases:</strong><ul><li>A nameplate under a donated digital blackboard in a charitable institution.</li><li>A plaque stating a donation in the memory of a donor’s relative at a temple.</li></ul></li><li><strong>Conditions for GST Exemption:</strong> For the exemption to apply, the following conditions must be met:<ol><li>The donation is made to a charitable organization.</li><li>The payment is a true gift or donation.</li><li>The purpose of the donation is philanthropic, not for commercial gain or publicity.</li></ol></li></ul><p>This clarification ensures that charitable organizations and donors can proceed without concerns over unintended GST liabilities on such acknowledgements.</p><p><a href="https://cms.plasament.com/storage/chirag-singla/circular-cgst-116.pdf">circular-cgst-116</a><br> </p>