No GST on adoption fees, kids not goods: AAR
- The bench gave the ruling after hearing from a recognised adoption agency's stance that children are not “goods” and the agency does not provide any “services” to the prospective parents
- The trust pointed out that it does not make any “supply” in the “furtherance of business”, which is an integral element for imposition of GST
AAR gave the ruling after agreeing with the argument of a recognised adoption agency from Nerul that children are not “goods” and the agency does not provide any “services” to the prospective parents.
Indian couples interested in adopting a child must pay a fee of Rs 40,000. Those living abroad and wishing to adopt from India are charged $5,000. The fees are set by the government under the ‘Adoption Regulations’, and specialized (recognized) adoption agencies are permitted to receive payment directly from the prospective parents and use it for the welfare of the kids with them.
The AAR ruling came on a plea filed by the Nerul charitable trust that the fees it receives should not be subject to GST. Children of the World India Trust said it houses 44 kids, of whom 22 are below 3 and the rest under 6. Some of them are special needs kids, it said.
Children of the World submitted before AAR that some of the special needs children with it needed care like physiotherapy and occupational therapy. The agency further contended that from the time a child is admitted to its Vishwa Balak Kendra—child shelter unit—the trust provides for his/her food, clothing, shelter, foster care, health care, schooling, etc until the time the child is adopted or transferred to another government organisation.
The trust has around 20 lady caretakers and nine nursing staff to look after the infants round the clock. During the course of the hearing before AAR, it produced pictures of children being cared for, being taught alphabets, etc, to support its claims.
Contending that children are not “goods”, the trust pointed out that it does not make any “supply” in the “furtherance of business”, which is an integral element for imposition of GST. It said it is a registered charitable trust whose activities are exempted from GST. It added that it is regulated by the government through the Central Adoption Resource Agency (CARA) and has no control over the admission of a child in its kendra or selection of children by prospective parents.
Submitting before the AAR bench that it is not engaged in any business, the trust pointed out that adoption of a child cannot be a business in view of the strict provisions of the Juvenile Justice Act. In fact, if there is any element of business in adoption activities, it will be treated as a criminal offence, it said.
Taking cognizance of the submissions, AAR held that the activities conduct by the trust were charitable and hence exempted from GST. Further, it said, the receipt of adoption fees would be exempt from levy of GST.