Central Tax Circulars

CGST Circular 116/2019

To:

The Principal Chief Commissioners/ Chief Commissioners/ Principal
Commissioners/ Commissioner of Central Tax (All) /
The Principal Director Generals/ Director Generals (All)

Madam/Sir,

Subject: Levy of GST on the service of display of name or placing of name plates of the
donor in the premises of charitable organisations receiving donation or gifts
from individual donors– Reg.

1) Representations have been received seeking clarification whether GST is
applicable on donations or gifts received from individual donors by charitable
organisations involved in advancement of religion, spirituality or yoga which
is acknowledged by them by placing name plates in the name of the individual
donor.

2) The issue has been examined. Individual donors provide financial help or any
other support in the form of donation or gift to institutions such as
religious institutions, charitable organisations, schools, hospitals,
orphanages, old age homes etc. The recipient institutions place a name plate or
similar such acknowledgement in their premises to express the gratitude. When
the name of the donor is displayed in recipient institution premises, in such a
manner, which can be said to be an expression of gratitude and public
recognition of donor’s act of philanthropy and is not aimed at giving publicity
to the donor in such manner that it would be an advertising or promotion of his
business, then it can be said that there is no supply of service for a
consideration (in the form of donation). There is no obligation (quid pro quo)
on part of recipient of the donation or gift to do anything (supply a service).
Therefore, there is no GST liability on such consideration.

2.1 Some examples of cases where there would be no taxable supply are as
follows:-

(a) “Good wishes from Mr. Rajesh” printed underneath a digital blackboard
donated by Mr. Rajesh to a charitable Yoga institution.

(b) “Donated by Smt. Malati Devi in the memory of her father” written on the
door or floor of a room or any part of a temple complex which was constructed
from such donation.

2.2. In each of these examples, it may be noticed that there is no reference or
mention of any business activity of the donor which otherwise would have got
advertised. Thus where all the three conditions are satisfied namely the gift
or donation is made to a charitable organization, the payment has the character
of gift or donation and the purpose is philanthropic (i.e. it leads to no
commercial gain) and not advertisement, GST is not leviable.

3) Difficulty if any, in the implementation of this circular may be brought to
the notice of the Board.