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:

1. The entity must be registered under Section 12AA of the Income Tax Act.
2. 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 counseling 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.