GST Leviable on Services Provided by Club or Association to Its Members

Goods and Services Tax (GST), introduced on July 1, 2017, is a comprehensive tax system that incorporates various other taxes into one single tax. GST has made a significant impact on how businesses operate in India.

However, when it comes to clubs and associations providing services to their members, it's important to understand how GST applies to these transactions. In this article, we will explore the GST leviable on services provided by clubs or associations to its members.

Understanding Clubs and Associations

Before diving into the GST implications, let's first understand what clubs and associations are. Clubs and associations are private entities that provide facilities and services to their members. These facilities and services can include sports facilities, dining facilities, fitness centers, etc.

GST Implications on Clubs and Associations

According to the GST law, any supply of services or goods made in the course of business is taxable unless it is exempted. Therefore, any services provided by clubs or associations to its members are taxable under GST.

However, GST has provided an exemption for certain services provided by clubs or associations to its members. These services include:

Services provided by a trade union to its members
Services provided by a professional body to its members
Services provided by a political party to its members
Services provided by a public library to its members

It's important to note that these exemptions only apply if the fees charged by the club or association from its members do not exceed INR 7,500 per annum. If the fees charged exceed this amount, the entire amount is taxable under GST.

For example, if a club provides services like fitness center, swimming pool, or any other recreational facilities to its members for an annual membership fee of INR 5,000, then the services provided by the club are exempted under GST. However, if the annual membership fee charged by the club is INR 10,000, then the entire amount is taxable under GST.

Calculation of GST on Services Provided by Clubs or Associations

The GST rate applicable on services provided by clubs or associations to its members is 18%. However, GST is calculated only on the amount that exceeds the INR 7,500 limit.

Let's take an example to understand how GST is calculated on services provided by clubs or associations:

If a club charges an annual membership fee of INR 8,000 from its members, then GST will be calculated on INR 500 (INR 8,000 - INR 7,500). Therefore, the GST amount payable will be INR 90 (18% of INR 500).

Conclusion

It is important for clubs and associations to understand the GST implications on services provided by them to their members. GST is applicable on services provided by clubs or associations, but exemptions are available if the fees charged do not exceed the limit of INR 7,500 per annum. Understanding the GST implications will help clubs and associations to comply with the GST law and avoid any penalties or legal issues.

This article explains the Goods and Services Tax (GST) leviable on services provided by clubs or associations to its members. The article covers the understanding of clubs and associations, GST implications and exemptions for services provided by clubs and associations, calculation of GST on services, and the conclusion.GSTClubs and Associationsgst-leviable-on-services-provided-by-club-or-association-to-its-members