A very common question these days being debated is- Whether a charitable trust registered under section 12AA of the Income Tax Act,1961 as well as under section 80G of the Income Tax Act required to obtain a GST registration?
Charitable activities are defined in Notification No 12/2017 – Central Tax (Rates) as below:
Charitable activities” means activities relating to –
i. public health by way of,-
A. care or counseling of
i. terminally ill persons or persons with severe physical or mental disability;
ii. persons afflicted with HIV or AIDS;
iii. persons addicted to a dependence-forming substance such as narcotics drugs or alcohol; or
B. public awareness of preventive health, family planning or prevention of HIV infection;
ii. advancement of religion, spirituality or yoga;
iii. advancement of educational programmes or skill development relating to,-
A. abandoned, orphaned or homeless children;
B. physically or mentally abused and traumatized persons;
C. prisoners; or
D. persons over the age of 65 years residing in a rural area;
iv. preservation of environment including watershed, forests and wildlife;
Exemption to Charitable & Religious Trusts is available only if below conditions are satisfied:
1. Trust is registered under Section 12AA of Income Tax Act, 1961, and
2. Services provided by Trusts are falling within the meaning Charitable activities.
Therefore, if the above two conditions are satisfied by a Trust, the supply so made by it falls outside the purview of GST,i.e., it is exempt from GST.
Further, as per Section 23 of the Central Goods & Services Tax Act, 2017, any person engaged exclusively in the business of supplying goods or services or both that are not liable to tax or are wholly exempt from tax shall not be liable to obtain GST registration.
A similar view has also been taken in All India Disaster Mitigation Institute, In re [2020] 120 taxmann.com 165 (AAR-Gujarat).
Hence, a trust registered under Section 12AA of the Income Tax Act, 1961 & providing services within the meaning of “charitable activities” as defined in the GST law are not required to obtain registration under the GST Act.