Charitable trust’s financial support for rape, child abuse victim won’t attract GST: West Bengal AAR

Shishir Sinha New Delhi | Updated on July 10, 2020 Published on July 10, 2020

Reimbursement of legal fees or expenditure on counselling for rape or child abuse victims will not attract Goods & Services Tax (GST), West Bengal’s Authority for Advance Ruling (AAR) has ruled.

The ruling came on an application from Kolkata-based charitable trust Swayam, which extends legal, medical, psychological and financial support to women and children who have survived violence and abuse. Swayam also facilitates training programmes and workshops for survivors of such atrocities.

Swayam had approached the AAR to ascertain whether it is liable to pay tax GST on its activities. The question, it said, has neither been decided nor is pending before any authority.

Swayam noted that it facilitates access to legal aid for women survivors. For example, it accompanies the survivor to the police station and to courts and liaises with lawyers when required. Depending on the financial circumstances of the survivor, it often provides support in the form of a reimbursement of court fee, lawyers’ fee or medical expenses, including hospitalisation or psychiatric counselling. Financial support is also extended for the remuneration of trainers and charges of facilitators for trainings and workshops. Survivors are not charged for any of these services, and the trust meets all such expenses from out of donations received and from the interest on deposits.

The bench observed that the applicant assists women survivors in various ways to get back on their feet. “Such survivors of sexual and other violence need services like legal aid, medical assistance, and vocational training. The recipient of such services is, therefore, not the applicant but the survivor woman,” the AAR said.

Further, the AAR observed that if the survivor pays the lawyer’s fee and the payment is reimbursed by Swayam, it becomes a kind of financial support to the survivor. For such a payment, the applicant is “not liable to pay GST based on reverse charge mechanism on such payments”, observed the AAR. The Authority noted that the applicant has not charged any fee on the survivor for facilitating legal aid or any other assistance.

“The applicant’s activities do not amount to ‘supply’ of service, neither is it a recipient of the services for which it often provides financial assistance to women survivors of sexual and other violence. The applicant is, therefore, not liable to pay GST on the activities described in the application,” AAR ruled.

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Published on July 10, 2020
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