Mumbai: Beginning July 1, the Goods and Services Tax will play spoilsport to fundraisers or charity events organised by non-government organisations (NGOs).
As total landed cost of holding such events would increase by at least 20 per cent, there will likely be a decline in hosting them, an Economic Times report said.
Clubs and NGOs that hold fundraisers or meetings will not be able to get an input credit on the food expenses under GST, unlike the current tax regime where they receive sales tax credit.
Apart from that, NGOs are complaining that they won't get any input credit on GST paid on subscription fees paid by their members.
Clubs such as Rotary Club and Lions Club fear that under GST there could be double taxation for them.
Read: What is GST and how will you benefit from it?
The idea behind double taxation implies that clubs, NGO's will have to pay 18 per cent GST on subscription fees of their members. While under the current tax regime, they receive an input credit of around 10.15 - 14.5 per cent on food and beverages costs at a fundraising event, the same will not hold once the indirect tax regime takes effect.
The GST framework does not allow credit for expenses incurred for activities that may not be directly construed as related to business. This includes expenses incurred for food and beverages.
Sources stated that many clubs would try to create structures that can bypass the GST regulations.
Source: http://www.timesnow.tv/business-economy/article/club-ngo-holding-fundraiser-charity-higher-tax-gst-double-taxation/63861
As total landed cost of holding such events would increase by at least 20 per cent, there will likely be a decline in hosting them, an Economic Times report said.
Clubs and NGOs that hold fundraisers or meetings will not be able to get an input credit on the food expenses under GST, unlike the current tax regime where they receive sales tax credit.
Apart from that, NGOs are complaining that they won't get any input credit on GST paid on subscription fees paid by their members.
Clubs such as Rotary Club and Lions Club fear that under GST there could be double taxation for them.
Read: What is GST and how will you benefit from it?
The idea behind double taxation implies that clubs, NGO's will have to pay 18 per cent GST on subscription fees of their members. While under the current tax regime, they receive an input credit of around 10.15 - 14.5 per cent on food and beverages costs at a fundraising event, the same will not hold once the indirect tax regime takes effect.
The GST framework does not allow credit for expenses incurred for activities that may not be directly construed as related to business. This includes expenses incurred for food and beverages.
Sources stated that many clubs would try to create structures that can bypass the GST regulations.
Source: http://www.timesnow.tv/business-economy/article/club-ngo-holding-fundraiser-charity-higher-tax-gst-double-taxation/63861
