Adoption Fee Out Of GST Ambit As Goods and Services Missing

Child adoption fee, paid by the soon-to-be parents does not come under the purview of Goods and Services Tax, according to the Maharashtra bench of the Authority for Advance Rulings.

Since the adoption agencies do not provide any services that may promote their operations and children can also not be treated as goods, the imposition of GST on the adoption fee becomes irrational in the absence of any services to the awaited parents and goods. This assertion was put forth by a specialized adoption agency from Nerul and was conceded by the AAR.

An adoption fee of Rs 40,000 and $5,000 is charged by an Indian couple and Foreign couple, respectively, who wish to adopt a child from India. These are the government-prescribed fee under the ‘Adoption Regulations’. The fees have to be paid by the prospective parents to the recognized agencies which the agencies use for the well-being of children living with them.

Nerul charitable trust who is housing and taking care of 44 kids, among which 50% are below the age of 3 years & 50% are below 6 years and some of them demands special care, filed an application before AAR that GST should not be levied on the fee charged by the prospective parents, adopting a child.

The plea was backed by Children of the World before AAR (Authority for Advance Rulings) Get to know about AAR (Authority for Advance Rulings) under GST India along with its mechanism. Also, we have described its objectives, powers, orders, etc where the fact that special children are given physiotherapy and occupational therapy was highlighted while drawing attention to the basic needs of children such as food, shelter, health care, schooling which has to be duly met by the agency until the child is adopted or shifted to any other government organization.

The entire proceeding was attested by the photos depicting how children are taken care of, how they are being taught and the availability of the whole team that includes around 20 lady caretakers & 9 nursing staff to meet the needs of the kids 24×7.

Contentions were made that children can not be treated as goods under GST and also the “suppl” in the “furtherance of business”, which is an intrinsic part for the imposition of GST, is absent. Contentions were supported by the statement that the activities carried out by registered charitable trust are GST exempt and the trust is controlled by the government via the Central Adoption Resource Agency (CARA).

Neither the admittance of a child in the Kendra is controlled by the agency nor their election at the time of adoption by the prospective father & mother.

According to the stringent provisions of the Juvenile Justice Act, child adoption can not be treated as a business and it is considered as a crime if in any way adoption activities are looked upon as business activity. The provision was given prominence by the agency during the presentation before AAR.

Taking into account all the facts and reasons, AAR concluded to keep the adoption fee and adoption activities out of the GST ambit as they are charitable acts carried out by the agency.