GST for Charitable Trusts & NGOs

GST is applicable for all types of goods and services in India unless exempt or NIL rated by the GST Council. Thus, contrary to popular beliefs, GST could be applicable for some of the services and goods supplied by a Charitable Trust or NGO. In this article, we look at the provisions of GST relating to charitable trusts and NGOs in India.

Criteria for Charitable Trust to Be Exempt from GST

To be exempt from GST, a charitable trust or NGO must satisfy the following two criteria:

The entity must be registered under Section 12AA of the Income Tax Act.
The services provided by the entity must be a charitable activity.

Under the GST Act, not all services provided by a Trust registered under Section 12AA would be termed as a charitable activity. Only the following activities are termed as charitable activity and exempt from GST:

Services relating to public health like:
- Care or counselling of terminally ill persons or persons with severe physical or mental disability;
- Persons afflicted with HIV or AIDS;
- Persons addicted to a dependence-forming substance such as narcotics drugs or alcohol;
Public awareness of preventive health, family planning or prevention of HIV infection;
Advancement of religion, spirituality or yoga;
Advancement of educational programmes or skill development relating to:
- Abandoned, orphaned or homeless children;
- Physically or mentally abused and traumatized persons;
- Prisoners; or
- Persons over the age of 65 years residing in a rural area;
Preservation of environment including watershed, forests and wildlife.

Hence, if a charitable trust or NGO does not satisfy any of the two conditions, then GST would be applicable and the entity must be registered under GST.

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Are services provided by Charitable Trust exempt from GST?

No, only charitable activities as defined above provided by a charitable trust or NGOs having 12AA registration is exempt from GST. Any other service provided by a Trust for consideration would be liable for tax under GST.

Are goods sold by Charitable Trust exempt from GST?

Yes, goods sold by a charitable trust for consideration is taxable under GST. Hence, there is no exemption for the supply of goods by charitable trusts. Thus, 1 applicable for the goods normally must be paid by the charitable trust on purchases and collected on supply.

GST Applicable for Colleges and Universities

While implementing

GST, services which enjoyed exemption from service tax were also exempt from GST. Thus, the services provided by an educational institution to its students, faculty and staff are exempt from GST. Also, the GST exempts the following services provided to an educational institution:

Transportation of students, faculty and staff;
Catering, including any mid-day meals scheme sponsored by the Government;
Security or cleaning or housekeeping services performed in such educational institution;
Services relating to admission to, or conduct of examination by, such institution;

Under GST, “educational institution” refers to an institution providing services by way of:

Pre-school education and education up to higher secondary school or equivalent;
Education as a part of a curriculum for obtaining a qualification recognized by any law for the time being in force;
Education as a part of an approved vocational education course;

In addition to the exemption continuing from the erstwhile Service Tax regime, income from education is wholly exempt from GST if a charitable trust is running a school, college or education institution for abandoned, orphans, homeless children, physically or mentally abused persons, prisoners or persons over age of 65 years or above residing in a rural area.

Applicability of GST on Training Programs, Camps and Events

Training programs, camps, yoga programs and other events that are not free for participants conducted by a charitable trust would be considered a commercial activity, liable for GST. Hence, if a Trusts receives any consideration (donation or otherwise) for any type of program including for arranging residential camps, the same would be liable for taxation under GST.

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Frequently Asked Questions

Common questions about GST Laws for Charitable Trusts & NGOs in India.

To be exempt from GST, a charitable trust or NGO must be registered under Section 12AA of the Income Tax Act, and the services provided by the entity must be classified as a charitable activity under the GST Act. Only specific activities like public health services, advancement of religion or education, and environmental preservation are considered charitable activities and exempt from GST.

No, only the charitable activities as defined under the GST Act, when provided by a charitable trust or NGO with 12AA registration, are exempt from GST. Any other service provided by the trust for consideration would be liable for GST.

Yes, goods sold by a charitable trust for consideration are taxable under GST. There is no exemption for the supply of goods by charitable trusts, and they are required to pay the applicable GST rate on purchases and collect GST on sales.

Yes, services provided by an educational institution to its students, faculty, and staff are exempt from GST. Additionally, certain services like transportation, catering, security, and admission or examination-related services provided to an educational institution are also exempt from GST.

If a charitable trust receives any consideration (donation or otherwise) for conducting training programs, camps, yoga programs, or other events, such activities would be considered commercial in nature and liable for GST.

Registration under Section 12AA of the Income Tax Act is a mandatory criterion for a charitable trust or NGO to be eligible for the GST exemption on charitable activities. Without this registration, the trust cannot claim the GST exemption, even if the services provided are classified as charitable activities under the GST Act.

Yes, if a charitable trust is running a school, college, or educational institution specifically for abandoned, orphaned, homeless children, physically or mentally abused persons, prisoners, or elderly persons over 65 years residing in rural areas, the income from such educational services is wholly exempt from GST.

Charitable trusts or NGOs engaged in providing taxable supplies of goods or services can claim input tax credit on the GST paid for their inward supplies, subject to the standard rules and conditions for availing input tax credit under the GST Act.

No, donations or grants received by a charitable trust or NGO are not considered as consideration for any supply of goods or services and are therefore not subject to GST.

If a charitable trust provides any services to its members for consideration, such services would be liable for GST, unless specifically exempt under the GST Act. The exemption from GST is applicable only for charitable activities provided to the general public and not for services provided to members for a fee or consideration.