While trade and industry bodies welcomed the Karnataka government's assurance that it would not actively pursue GST notices issued over the past 2-3 years on exempted goods and services, the announcement has failed to bring much relief to civil society organisations and educational institutions. Many fear ongoing harassment, citing recent instances of tax demands that appear to ignore GST exemptions.
A major concern voiced by stakeholders is the issuance of GST notices to charitable institutions and schools-despite their services falling under tax-exempt categories.
NGOs Question Scrutiny Over Donations
A Bengaluru-based NGO, which has been serving orphaned children for over eight decades, was issued a GST notice requesting transaction details for the last three financial years. The NGO, which functions entirely on donations and does not engage in any commercial activity, expressed disbelief at being treated like a business entity.
"We are not a supplier of goods or services. We are the end consumers. We pay tax on whatever we purchase and do not claim input tax credits," said a representative from the NGO, requesting anonymity. He added that officials issued the notice even after visiting their premises and understanding the nature of their work.
The NGO fears such notices could deter donors and volunteers, ultimately affecting their social impact. "We have never faced any tax issues since 1942. Why now and why like this?" the representative asked, calling the move unjustified and demoralising.
Educational Institutions Face GST Heat for Karate, Sports Activities
In Mysuru, a private school received a similar GST notice questioning fees collected for karate and other co-curricular activities. The school contends that these sessions are part of the regular academic curriculum and should be exempt from GST.
"We understand GST applies to books and uniforms. But sports and other co-curriculars are academic in nature," said the school's secretary, who also serves on a local schools' association. He noted that even after full compliance and submission of audit records, the school has not received clarity or closure.
The school expressed concerns over the ambiguity in GST policy for educational institutions. "If a sports class is conducted independently, yes, it can attract GST. But we are offering a holistic curriculum. Why are we being penalised for that?"
Call for Clear Guidelines and Sensitivity
Despite the government's assurance, the practical experience of NGOs and schools paints a different picture-one of policy misinterpretation and bureaucratic overreach. Stakeholders are now urging the state and central authorities to issue clear, binding guidelines to prevent harassment of non-commercial entities.
"Tax officers must be trained to distinguish between profit-making and service-oriented institutions. Issuing blanket notices based on UPI or RTGS payments only adds to confusion and anxiety," said a member of a trade body.
With growing concerns and calls for reform, it remains to be seen whether the government will take corrective steps to back its assurance with action.
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