FAQ: GST for NGOs

Disclaimer: This document is intended solely for educational purposes. The content herein is subject to change based on evolving finance trends and any relevant rulings by the Government of India. Readers are advised to consult with qualified professionals for specific guidance related to their individual circumstances.

Q1. What are the criteria for a charitable trust to be exempted from GST?

There are certain criteria for a charitable trust or an NGO to be exempted from the Goods and Services Tax. The charitable trust or NGO must be registered under Section 12AA of the Income Tax Act, and the services provided by the charitable trust or the N

Q2. What is “charitable activity” under GST?

Notification no 12/2017 the term “charitable activity” has been explained. (Chapter 99 Sl. No.1)

“Charitable activities” –

(i) public health by way of,-

Q3. What about goods sold by a charitable trust?

Goods that are sold by a charitable trust is taxable. The charitable trust must pay the GST rate applicable while purchasing the supply.

Q4. Is GST applicable on training programs, camps, and events conducted by a charitable trust?

If a charitable trust is conducting training programs, yoga camps, or other programs that are not free for participants, it will be considered as a commercial activity and hence will be liable for GST. Even the donation received for such an activity will be liable for taxation under GST. Services provided by way of training or coaching in recreational activities relating to arts and culture, or sports by a charitable entity will be exempt from GST.

Q5. Are the events organized by charitable trusts exempt from GST?

If trusts are running schools, colleges or any other educational institutions specifically 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, such activities will be considered as charitable activities and income from such supplies will be wholly exempt from GST.

Q6. What happens when a charitable trust rents out a religious place? Is there any GST on that?

GST law has chalked out GST exemptions, when a charitable trust rents out religious meant for general public (owned and managed by a registered charitable trust under 12AA of the Income Tax Act, 1961). GST will be exempted when:

Resource material for NGOs on GST

Key definitions under CGST Act 2017 for NGOs to know:
  1. Section 2(84) defines the term “person” which include Trusts, Societies and all types of artificial juridical person

  2. Sec 2(17) defines “Business” which includes  any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit;

  3.  Section 2(28) defines “Consideration” as monetary value or payment for an activity. Payment is Not Consideration. The act of mere payment, and/or undertaking to pay arising out of a contract towards any assistance, without getting anything in return or supply in any form in return cannot be called as consideration

  4. Section 7 (1) defines scope of supply to include: 

    • all forms of supply of goods & services or both, such as sale, transfer, barter, exchange, license, rental, lease or disposal made/agreed to be made-VC/corpus not supply, no specified beneficiaries.

    • Consideration-provided a grant is linked to beneficiaries/implementing partner/ donor

    • in the course of furtherance of business-Grant is a legal obligation and not income. Also incidental activity would be excluded if primary activity is charitable

  5.  Levy & Collection-As per section 9(1) of CGST Act, Tax is leviable on  the supply of Goods/Services or both on the value determined under section 15 and at such rates as prescribed under various schedules of the Act

Architecture of GST
  1. GST is destination based consumption tax. Benefit of tax (STCG/ UTGST) will accrue to the consuming state

  2. When supply of goods/services happens within a state called intra-state transactions, then both the CGST and SGST/UGST will be collected. 

  3. if the supply of goods or services happens between the states called inter-state transactions, then only IGST will be collected.


cgst sgst igst

Illustrated: 

GST:

How GST operates

(a) The inter-state supplier in the exporting state is allowed to set off the available credit in IGST, CGST and SGST/UTGST against the IGST payable on inter-state supply made by him. 

(b) The buyer of importing state in inter-state supply can avail the credit of IGST paid on purchase from the output tax payable. 

(c) The exporting state transfers to the center the credit of SGST/ UTGST utilized for the payment of IGST. 

(d) The Centre transfers to the importing state the credit of IGST used in payment of SGST/UTGST.


Type of supply

a. Supplies taxable at a ‘NIL’ rate of tax (0% tax)-milk, grains, salt

b. Supplies that are wholly or partially exempted from CGST or IGST, by way of a notification amending CGST/IGST Act

c. Non-taxable supplies– supplies that are not taxable under the Act-Alcoholic liquor for human consumption, petrol.

Rates of levy

Input Tax Credit

GSTR 1

GSTR 2B

GSTR 3B

The filing frequency of GSTR-3B is currently as follows:

GST under RCM

Composition scheme under GST

HSN and SAC

HSN code and SAC code are the codes used to classify goods and services under the GST regime in India.

HSN means Harmonized System of Nomenclature code used for classifying the goods under the GST, Goods and Service Tax.

The SAC code means Services Accounting Code under which services fall under GST are classified.

HSN code has 8 digits and SAC code has 6 digits 

E way bill and E invoice


Revision #4
Created 30 July 2024 09:47:29 by Pooja
Updated 4 September 2024 04:15:08 by Pooja