Understanding GST Applicability for Charitable Trusts

S Since 1962 & Co.

GST ON CHARITABLE TRUSTS

Agenda

• Applicability of GST in relation to Charitable Trusts
• Exemption relating to charitable activities
• Exemption relating to healthcare services
• Exemption relating to educational institutions
• Other relevant notable exemptions
• Taxability of supplies made free of cost
• Impact on ITC
• Registration requirements

GST on Charitable Trusts by Aditya Surte  |  08-Aug-2026

Applicability of GST to Charitable Trusts

Art. 366 (12A):

“goods and services tax” means any tax on supply of goods, or services or both except taxes on the supply of the alcoholic liquor for human consumption

Sec. 7 of CGST Act:

“supply” includes all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business

Key Elements: consideration  |  person  |  business

2(84): Person includes –

• Individual, HUF, Company, Firm, LLP
• AOP or BOI, whether incorporated or not, in India or outside India
• Corporation established by or under any Central Act, State Act or Provincial Act or a Govt company as defined u/s 2(45) of the Companies Act, 2013
• Body corporate incorporated by or under the laws of a country outside India
• Co-operative society registered under any law relating to co-operative societies
• Local authority
• Central Govt or State Govt
• Society as defined under the Societies Registration Act, 1860
• Trust
• Every artificial juridical person, not falling within any of the above

2(17): Business includes –

(a) Any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not for pecuniary benefit;

(b) Any activity or transaction in connection with or incidental or ancillary to sub-clause (a);

(c) Any activity or transaction in the nature of trade, commerce, etc., whether or not there is volume, frequency, continuity or regularity of such transaction

For the purpose of ‘business’ u/s 2(17), it is immaterial whether such a trade or commerce or such activity is for pecuniary benefit or not.
— Nagri Eye Research Foundation v. UOI [2021] (54) G.S.T.L. 11 (Guj.)

Landmark judgement under BST Act, 1959

Where the main activity of the Trust does not fall within the meaning of “business”, any incidental or ancillary activity shall also not be considered as business.

• Trust was created with the primary object of spreading the message of Saibaba of Shirdi.
• In furtherance of and to accomplish the said object, trust published books, pamphlets & other literature containing Sai Baba’s message and sold at nominal charge to meet cost.
• Sale proceeds of publication formed the property of the trust, which could be utilised only for advancement of the objects of the trust.
• Specific provision in the trust deed that in the event of failure of the trust to carry on its objects, the remaining fund in its hands would be handed over to Sansthanam of Shirdi.
• SC: The question of profit-motive or no profit-motive would be relevant only where a person carries on trade, commerce, manufacture or adventure in the nature of trade, commerce, etc. On the facts and in the circumstances of the case, irrespective of the profit-motive, it could not be said that the Trust either was ‘dealer’ or was carrying on trade, commerce etc.

Notable AAR and AAAR (Business)

Shrimad Rajchandra Adhyatmik Satsang Sadhana Kendra (Maharashtra AAR & AAAR)

• Whether the sale of spiritual products such as books, DVDs, etc. could be treated as supply attracting GST?
• Applicant contended that the money earned from sale of such goods was used for main object, i.e., for charitable and religious purposes. Therefore, since the main activity is not business, ancillary activity cannot be treated as business.
• Applicant placed reliance on the Supreme Court ruling in the case of Sai Publication Fund and CIT v. Gujarat Maritime Board [2007] 14 SCC 704 (SC) wherein it was held that if the primary or predominant object of the trust is charitable, any other object which might not be charitable, but which is incidental or ancillary to the dominant object will also be considered as charitable.
• AAR held that that there was no specific exemption to registered charitable trusts for supply of such goods under GST. The sale of spiritual products which was incidental or ancillary to main charitable object of assessee could be said to be business. Therefore, the sale of spiritual products would be treated as supply attracting GST.
• Appellate AAR upheld the order of AAR.
• Applicant has moved the High Court of Judicature at Bombay by way of writ petition.

2(31): Consideration

Includes

• Any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person
• Monetary value of any act or forbearance, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person

Does not include

• Subsidy given by the Central Government or a State Government
• Deposit, unless the supplier applies such deposit as consideration for the supply

Donations received by Charitable Trusts

• Donations are gratuitous payments
• Not ‘consideration’ for supply
• Not liable to GST
• Unless the trust is obligated to provide something in return

Donations received by Charitable Trusts (Contd.)

CBIC Circular No. 116/35/2019-GST dated 11-10-2019:

“Where the name of the donor is displayed in recipient institution premises, in such a manner, which can be said to be an expression of gratitude and public recognition of donor’s act of philanthropy and is not aimed at giving publicity to the donor in such manner that it would be an advertising or promotion of his business, then it can be said that there is no supply of service for a consideration (in the form of donation). There is no obligation (quid pro quo) on part of the recipient of the donation or gift to do anything (supply a service). Therefore, there is no GST liability on such consideration.

Thus, where all the three conditions are satisfied namely, (i) the gift or donation is made to a charitable organisation, (ii) the payment has the character of gift or donation and (iii) the purpose is philanthropic (i.e. it leads to no commercial gain) and not advertisement, then GST is not leviable.”

Notable Adv. Ruling (Consideration):
Jayshankar Gramin and Adivasi Vikas Sanstha (MH AAR) [21-09-2022]

Where appellant receives grant from Government under ‘One stop crises centre’ scheme to render services to destitute women who are litigating divorcees, or homeless or victims of domestic violence, said activities/transactions undertaken by appellant could not be construed as supply in terms of Section 7(1) (a) as there is no element of consideration and said activities will not be subject to levy of GST.

Applicability of GST to Charitable Trusts

Person + Consideration + Business  ==>  GST Applicable (Unless specifically exempted)

Exemption to charitable activities – Criteria

• Services by an entity registered u/s 12AA or 12AB of the Income Tax Act, 1961
• By way of activities which are specifically defined as “charitable activities” in Para 2(r) of Notification No. 12/2017-CTR dt. 28-06-2017

Charitable Activities defined – Para 2(r)

1. Activities relating to public health by way of:
   • 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

2. Activities relating to advancement of religion, spirituality or yoga

3. Activities relating to advancement of educational programmes or skill development relating to:
   • Abandoned, orphaned or homeless children
   • Physically or mentally abused and traumatised persons
   • Prisoners
   • Persons over the age of 65 years residing in rural area*

4. Activities relating to preservation of environment including watershed, forests and wildlife

Rural area means the area comprised in a village as defined in land revenue records excluding the area under any municipal committee, municipal corporation, town area committee, cantonment board or notified area committee or any area that may be notified as an urban area by the Central Government or a State Government.

Notable Advance Rulings on “Charitable Activities”

Polaris Foundation (Tamil Nadu AAR) [06-06-2023]

Public charitable trust, registered under section 12AA of Income Tax Act, 1961, creating public awareness on COVID appropriate behavior, infection prevention and control, is covered under definition of ‘Charitable Activities’ in clause 2(r) in Notification No. 12/2017-Central Tax (Rate), dated 28-6-2017, and will be exempt from GST under Sl. No. 1 thereof.

Notable Advance Rulings on “Charitable

Activities” (Contd.)

Dream Runners Foundation (Tamil Nadu AAR) [22-01-2019]

• Applicant-trust is registered u/s 12AA of the Income-tax Act and engaged in conducting public charitable activities such as healthcare, rural development, women empowerment, education facility etc., either directly or through various public charitable institutions.
• Applicant conducts a marathon named Dream Runners Half Marathon. It collects donations from the participating runners and corporate donations. The amount so received is utilised for the expenses required to conduct of the event and the balance amount is paid as donations to NGOs supporting the cause or directly to the beneficiaries.
• Held: The activity of conducting Marathon event does not fall under the definition for Charitable activities. Though the money collected from the participants may be donated or used for further charitable activities, organising marathon itself is a separate supply of service by the applicant for the various participants, individuals or runner groups etc.
• The money collected from the participants is a consideration towards the supply of service of organising and conducting the marathon for the participant’s conduct of marathon event and the same is liable to GST.

Notable Advance Rulings on “Charitable Activities” (Contd.)

Ecosan Services Foundation (Maharashtra AAR) [19-12-2018]

• Applicant is a NPO registered u/s 12AA and providing services of sanitation capacity building through training, piloting and demonstration, awareness raising, R&D and open dissemination of knowledge in sustainable sanitation and water management.
• Donations / grants are received from various companies and persons.
• Q. Whether the aforesaid services provided to NGOs registered u/s 12AA amounts to provision of service and whether donations received are liable to GST?
• Held: Services relating to sanitation provided to various entities including non-profit organisations by the applicant entity registered u/s 12AA are exempt as they are relating to preservation of environment.

Notable Advance Rulings on “Charitable Activities” (Contd.)

All India Disaster Mitigation Institute (Gujarat AAR) [11-09-2019]

• Applicant is a charitable trust established for community-based research, policy analysis, planning and technical assistance for the purpose of enhancing prevention, mitigation and management of disasters and reorientation of relief and reconstruction to local initiatives. It is registered under section 12AA and section 80G of the Income-tax Act.
• Held: Activities of the applicant relating to disaster prevention, disaster mitigation and disaster management are activities relating to preservation of environment. Thus, the activities of the applicant are considered as charitable activities.
• Applicant, being registered under section 12AA of the Income-tax Act, the activities are exempt from tax by virtue of Entry No. 1 of Notification No. 12/2017-CTR.

Activities relating to advancement of religion, spirituality or yoga

CBIC Circular No. 66/40/2018-GST dated 26-09-2018

Exempt

• Fee or consideration charged in any form from the participants for participating in a religious, Yoga or meditation programme or camp meant for advancement of religion, spirituality or yoga.
• Residential programmes or camps where the fee charged includes the cost of boarding and lodging so long as the primary or predominant activity, objective and purpose is advancement of religion, spirituality or yoga.

Taxable

• If charitable trusts merely or primarily provide accommodation or serve food and drinks against consideration in any form including donation.
• Activities such as holding fitness camps or classes such as those in aerobics, dance, music, etc.

Renting of religious precincts

Entry 13 (Heading 9963 / 9972 / 9995):

Services by a person by way of –
a) conduct of any religious ceremony
b) renting of precincts of a religious place meant for general public, owned or managed by an entity registered as a charitable or religious trust u/s 12AA/12AB or 10(23C)(v) or 10(23BBA).

Provided that nothing contained in entry (b) shall apply to –
• Renting of rooms where charges are Rs. 1,000 or more per day
• Renting of premises, community halls, kalyanmandapam or open area where charges are Rs. 10,000 or more per day
• Renting of shops or other spaces for business where charges are Rs. 10,000 or more per month

Nandini Ashram Trust (Gujarat AAR) [26-04-2023]

Providing accommodation to pilgrims visiting Ambaji Temple at Rs. 1,000/day. Not owned by managing trust of temple and rooms not located within precincts. Exemption under Serial No. 13 not applicable.

Health care services

Entry 74 (Heading 9993):

a) Services by way of health care services by a clinical establishment, an authorised medical practitioner or para-medics;
Excluding room charges exceeding Rs. 5,000 per day (other than ICU/CCU/ICCU/NICU).
b) Services by way of transportation of a patient in an ambulance.

Manthena Satyanarana Raju Charitable Trust v. UOI [2017 (3) G.S.T.L. 213 (A.P.)]

Naturopathy, food therapy, water therapy and yoga treatment provided by public charitable trust eligible for exemption.

Key Healthcare Rulings:

• KIMS Health Care (Kerala AAR): Medicines, consumables and implants used for in-patients form composite supply eligible for exemption.
• Terna Public Charitable Trust (MH AAR): In-patient pharmacy & food is composite exempt supply. Pharmacy sales to out-patients are taxable.
• Baroda Medicare / Oswal Industries (Gujarat AAAR): Occupational health check-ups exempt. Residential wellness packages driven by room selection are taxable accommodation.

Services by rehab professionals

Entry 74A (Heading 9993): Services provided by rehabilitation professionals recognized under RCI Act, 1992 by way of rehabilitation, therapy or counselling at medical establishments, educational institutions, or 12AA/12AB rehab centers are exempt.

Educational Institutions

Entry 66 (Heading 9992):
• Services provided by educational institution to students, faculty and staff (Exempt).
• Conduct of entrance exam against entrance fee (Exempt).
• Services TO educational institution: Transportation, catering/mid-day meals, security/cleaning/housekeeping, admission/examination conduct, online journals (Exempt for pre-school/higher secondary).

Other Notable Exemptions

Entry	SAC / Ch.	Description of Service
9D	Ch. 99	Services by old age home (Govt or 12AA/12AB) to residents (60+ yrs) up to Rs. 25,000/month/member inclusive of boarding, lodging & maintenance.
50	Heading 9984	Public libraries lending books, publications or knowledge-enhancing material.
60	Heading 9991	Services by specified organisation for religious pilgrimage facilitated by Govt of India.
76	Heading 9994	Public conveniences: bathrooms, washrooms, lavatories, urinals or toilets.
77	Heading 9995	Unincorporated body/NPO services to members for trade union or exempt activities.
77A / 80	Heading 9995 / 9996	77A: Member welfare services up to Rs. 1,000/member/year. 80: Coaching in arts/culture (by individual) or sports (by 12AA/12AB entity).

Import of Services & Digitisation Impact

• Entry 10 of NN 9/2017-ITR: Services received from non-taxable territory by 12AA entity for charitable activities are EXEMPT (except OIDAR).
• OIDAR Services (Zoom, Canva, Cloud): Foreign supplier pays IGST if trust unregistered. If trust registered, GST applies under Reverse Charge Mechanism (RCM).

Hostel Accommodation Services

• 01.07.2017 to 17.07.2022: Exempt if tariff <= Rs. 1,000/day.
• 18.07.2022 to 14.07.2024: Entirely taxable.
• Post-15.07.2024 (Entry 12A): Exempt if value <= Rs. 20,000 per person per month AND continuous stay >= 90 days.
• Maharashtra Jain Education Society (MH AAR 2024): 10-month student stay exempt. Short-term stay (1-2 months) taxable.
• K.L.N. Sourashtra College (TN AAR 2025): Leasing hostel premises to another entity is Real Estate Service (Heading 9972), taxable at 18%.

Supplies FOC, ITC & Registration

• Free of Cost Supplies: Not taxable unless falling under Schedule I (permanent transfer of ITC assets or transactions with related/distinct persons).
• ITC Impact: Available on taxable supplies, NOT available on exempt supplies. Common ITC reversal as per Rule 42 & 43.
• Registration: Threshold Rs. 20L (services/goods) / Rs. 40L (goods). Sec 23 exempts entities exclusively in exempt supplies.

Travancore Devaswom Board (Kerala AAR) [04-03-2026]

Facts	Observations / Ruling
Auctioning exclusive rights within temple precincts (licensing commercial activities)	Commercial character. Granting licence/rights for consideration constitutes supply -> TAXABLE.
Auctioning right to collect remnants of rice & coconuts offered in rituals	Conferment of exclusive right to collect & appropriate remnants -> Licensing service -> TAXABLE.
Auctioning right to collect clothes abandoned by devotees in Pamba River	Exclusive commercial licence to collect abandoned clothes -> Licensing service -> TAXABLE.
Auctioning right to harvest coconuts from temple land palms	Directly related to agricultural operations (harvesting primary produce) -> EXEMPT under Entry 54.
Auctioning rights to perform rituals (Pulluvanpattu & Balithara) to priests	Granting licence to conduct rituals for consideration in course of business -> TAXABLE.
Auctioning rights to manage toilets / renting space for pooja stalls	Toilets management grant -> TAXABLE. Space for pooja stalls -> EXEMPT under Entry 13(b) if rent < Rs. 10,000/month.