GST on Charitable and Religious Trusts

GST on Charitable and Religious Trusts: Exemptions, Rulings and Compliance Explained

Do charitable trusts pay GST? The short answer

Yes. A charitable or religious trust is fully within the GST net, and its supplies are taxable unless a specific exemption applies. Being registered under the Income-tax Act or having noble objects does not by itself make a trust GST-free.

Most core charitable work is exempt, but many routine trust activities are not. Selling books, renting halls, running hostels, organising events and auctioning temple rights can all attract GST. This guide explains when GST applies, which exemptions a trust can claim, what the authorities have ruled, and how input tax credit and registration work.

When does GST apply to a trust?

GST is levied on a “supply” (Article 366(12A) of the Constitution). Under Section 7 of the CGST Act, a supply is taxable when three things come together: it is made by a person, for a consideration, in the course or furtherance of business. A charitable trust usually meets all three.

Test	What the law says	Does a trust meet it?
Person (S.2(84))	Expressly includes a trust, a society registered under the Societies Registration Act, 1860, a co-operative society and a company	Yes, by name
Business (S.2(17))	Any trade, commerce, profession or similar activity whether or not for profit; anything incidental or ancillary to it; and any activity in the nature of trade, even if occasional	Often yes, since profit motive is irrelevant
Consideration (S.2(31))	Any payment, in money or otherwise, or the value of any act, for a supply, paid by the recipient or anyone else; excludes government subsidies and deposits not applied to the supply	Yes, whenever the trust receives something in return

The “business” debate

The Gujarat High Court in Nagri Eye Research Foundation v. Union of India ([2021] 54 GSTL 11) confirmed that profit motive does not matter in deciding whether an activity is business.

Trusts often rely on Commissioner of Sales Tax v. Sai Publication Fund ([2002] 126 STC 288, SC). There, a trust spreading the message of Sai Baba sold books at cost, and the Supreme Court held it was not carrying on business. If the main activity is not business, incidental sales are not business either.

The GST authorities have not followed that reasoning. In Shrimad Rajchandra Adhyatmik Satsang Sadhana Kendra, the Maharashtra AAR and Appellate AAR held that a spiritual trust’s sale of books and DVDs was taxable. They reasoned that GST has no general exemption for charitable trusts, and that ancillary activities fall within the wider GST definition of business, which expressly covers incidental activities. The trust has challenged this before the Bombay High Court.

Bottom line: assume GST applies to anything a trust sells or provides for a price, and then look for a specific exemption.

Donations and grants: no GST unless something is given in return

A genuine donation is a gift, not a payment for a supply, so it attracts no GST. GST arises only if the trust is obliged to give something back.

CBIC Circular No. 116/35/2019-GST dated 11 October 2019 sets out three conditions for a donation to be outside GST:

1. it is made to a charitable organisation;
2. it has the character of a gift or donation; and
3. its purpose is philanthropic, with no commercial gain, and not advertisement.

Displaying a donor’s name, for example on a plaque, is fine if it simply thanks and publicly recognises the donor. If the display is really advertising the donor’s business, the “donation” becomes payment for a sponsorship or advertising service and is taxable.

Government grants. In Jayshankar Gramin and Adivasi Vikas Sanstha (Maharashtra AAR, 21 September 2022), a trust received a government grant to run a One Stop Crisis Centre for destitute and abused women. The AAR held there was no consideration and therefore no supply, so no GST applied. The test is whether the grant pays for a service to the grantor, or simply funds the trust’s own charitable work.

The charitable activities exemption (Entry 1)

Entry 1 of Notification No. 12/2017-Central Tax (Rate) exempts services only when both conditions are met:

1. the trust is registered under Section 12AA or 12AB of the Income-tax Act; and
2. the service falls within “charitable activities” as defined in paragraph 2(r) of the notification.

The GST definition is much narrower than the income-tax meaning of charity. Paragraph 2(r) covers only:

Category	What is covered
Public health	Care or counselling of terminally ill persons or persons with severe physical or mental disability; persons with HIV or AIDS; persons addicted to drugs, alcohol or other dependence-forming substances. Also public awareness of preventive health, family planning or HIV prevention
Religion	Advancement of religion, spirituality or yoga
Education and skills	Advancement of educational programmes or skill development for abandoned, orphaned or homeless children; physically or mentally abused and traumatised persons; prisoners; and persons over 65 living in a rural area
Environment	Preservation of the environment, including watersheds, forests and wildlife

A “rural area” means a village as per land revenue records, excluding areas under any municipal body, cantonment board, notified area committee or notified urban area.

What the advance rulings say

Ruling	Activity	Outcome
Polaris Foundation (Tamil Nadu AAR, 6 June 2023)	Public awareness on COVID-appropriate behaviour and infection control	Exempt, as preventive health awareness
Ecosan Services Foundation (Maharashtra AAR, 19 December 2018)	Sanitation capacity building, training and research on water management	Exempt, as preservation of environment
All India Disaster Mitigation Institute (Gujarat AAR, 11 September 2019)	Research and technical help on disaster prevention and management	Exempt, as preservation of environment
Dream Runners Foundation (Tamil Nadu AAR, 22 January 2019)	Charity half-marathon funded by runners’ and corporate “donations”	Taxable: organising a marathon is a separate service to participants, even if surplus goes to charity

The lesson from Dream Runners: what matters is the service the trust actually provides, not where the money ends up.

Religion, spirituality, yoga and temple premises

Programmes and camps

CBIC Circular No. 66/40/2018-GST dated 26 September 2018 clarifies where the line falls:

Exempt	Taxable
Fees from participants in a religious, yoga or meditation programme or camp for advancement of religion, spirituality or yoga	A trust that merely or mainly provides accommodation, or food and drinks, for any consideration, including a “donation”
Residential programmes where the fee includes boarding and lodging, provided the main purpose is advancing religion, spirituality or yoga	Fitness camps, and classes in aerobics, dance, music and the like

Religious ceremonies and renting of precincts (Entry 13)

Entry 13 exempts (a) conducting any religious ceremony, and (b) renting precincts of a religious place meant for the general public. For (b), the place must be owned or managed by a trust registered under Section 12AA or 12AB, or an institution under Section 10(23C)(v) or a body under Section 10(23BBA) of the Income-tax Act.

The renting exemption does not apply to:

• rooms charged at Rs. 1,000 or more per day;
• premises, community halls, kalyana mandapams or open areas charged at Rs. 10,000 or more per day;
• shops or other commercial spaces charged at Rs. 10,000 or more per month.

A “religious place” is one primarily meant for prayer, worship, meditation or spirituality. “Precincts” is not defined; its ordinary meaning is the area within the walls or clear boundaries around a temple, church or similar place.

In Nandini Ashram Trust (Gujarat AAR, 26 April 2023), a trust rented rooms to pilgrims visiting Ambaji temple at Rs. 1,000 per day. The exemption was denied: the rate hit the Rs. 1,000 limit, the trust did not own or manage the temple, the rooms were outside its precincts, and there was no proof the rooms went only to pilgrims.

Healthcare services and rehabilitation

Entry 74: healthcare by clinical establishments

Healthcare services by a clinical establishment, an authorised medical practitioner or para-medics are exempt, as is ambulance transport of patients. This applies to any provider, not just trusts. The one exception is hospital rooms (other than ICU, CCU, ICCU or NICU) charged at more than Rs. 5,000 per day, which are taxable.

• Healthcare services means diagnosis, treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognised system of medicine in India, including transporting patients to and from a clinical establishment. Cosmetic or plastic surgery and hair transplants are excluded, unless done to restore function after congenital defects, injury or trauma.
• Clinical establishment means a hospital, nursing home, clinic, sanatorium or similar institution offering such diagnosis, treatment or care, or a diagnostic or investigative centre.

What the rulings say

Ruling	Issue	Outcome
KIMS Health Care (Kerala AAR, 2018)	Medicines, consumables and implants given to in-patients	Exempt, as a composite supply with treatment
Terna Public Charitable Trust (Maharashtra AAR, 2019)	Hospital pharmacy, food and rooms for in-patients; pharmacy sales to out-patients	In-patient supplies exempt; out-patient pharmacy sales taxable
Ambara (Karnataka AAR, 2020)	Food and beverages to patients	Exempt, as naturally bundled with treatment
Divyajivan Healthcare (Gujarat AAR, 2021)	20-year prepaid healthcare plan	Exempt under Entry 74
Baroda Medicare (Gujarat AAAR, 2022)	Occupational health check-ups, care outside the hospital	Exempt; Entry 74 covers preventive care wherever delivered
Oswal Industries (Gujarat AAAR, 2022)	Residential naturopathy and wellness packages priced by room type	Taxable; accommodation was the main supply
Corbett Nature Reserve (Uttarakhand AAAR, 2022)	Naturopathy marketed with a resort stay	Taxable at accommodation rates
OPTM Healthcare (West Bengal AAR, 2020)	Plant-based preparations not per recognised Ayurvedic texts	Not a clinical establishment; not exempt

Under the old service tax law, the Andhra Pradesh High Court in Manthena Satyanarayana Raju Charitable Trust v. Union of India (2017 (3) GSTL 213) held that a 12AA trust giving naturopathy treatment and health awareness was exempt as a charitable activity, not taxable as “health and fitness”. Trusts running naturopathy or wellness centres should therefore consider both Entry 1 and Entry 74, and avoid pricing that makes accommodation the main supply.

Entry 74A: rehabilitation professionals

Services by rehabilitation professionals recognised under the Rehabilitation Council of India Act, 1992 are exempt when provided at rehabilitation centres run by a 12AA or 12AB trust, or at government centres, medical establishments or educational institutions. These professionals include audiologists, speech therapists, clinical psychologists, hearing aid technicians, rehabilitation engineers, special teachers, vocational counsellors and multi-purpose rehabilitation therapists.

Educational institutions (Entry 66)

Services by an educational institution to its students, faculty and staff are exempt, and so are entrance examination fees it collects.

An educational institution is one providing any of:

• pre-school education and education up to higher secondary or equivalent;
• education leading to a qualification recognised by law; or
• an approved vocational education course.

Coaching centres, hobby classes and courses without a legally recognised qualification do not qualify.

Services received by an educational institution are exempt only in limited cases:

Service to the institution	Who gets the exemption
Transport of students, faculty and staff	Only pre-school to higher secondary
Catering, including government mid-day meal schemes	Only pre-school to higher secondary
Security, cleaning or housekeeping on campus	Only pre-school to higher secondary
Admission and examination-related services	All educational institutions
Online educational journals or periodicals	Only institutions above higher secondary (colleges, universities)

So a trust running a college pays GST on its bus, canteen and housekeeping contracts, while a trust running a school does not.

Other exemptions trusts commonly use

Entry	Service	Key condition
9D	Old age home run by government or a 12AA/12AB trust, for residents aged 60 or more	Up to Rs. 25,000 per resident per month, inclusive of boarding, lodging and maintenance
50	Public libraries lending books or other knowledge material	—
60	Religious pilgrimage by a specified organisation	Facilitated by the Government of India under a bilateral arrangement
76	Public conveniences: bathrooms, washrooms, toilets	—
77	Non-profit body’s services to its own members by way of reimbursement or share of contribution	For a trade union, or for carrying out an exempt activity, among others
77A	Non-profit body promoting welfare of labour or farmers, or trade, art, science, culture, sports, education, social welfare, charity or environment	Membership fee up to Rs. 1,000 per member per year
80 (from 18 July 2022)	Training or coaching in sports by a 12AA/12AB trust (and in arts or culture by an individual)	Applies to trusts only for sports

Imported services and foreign digital subscriptions

Under Section 7(1)(b) of the CGST Act, importing a service for consideration is a supply even when it has nothing to do with business. The trust, as recipient, is normally liable to pay IGST under reverse charge.

Non-digital services. Entry 10 of Notification No. 9/2017-Integrated Tax (Rate) exempts services received from abroad by a 12AA-registered entity for its charitable activities. For example, a trust paying a foreign architect to design a charitable hospital owes no reverse charge.

Online services (OIDAR). Entry 10 does not cover online information and database access or retrieval services, such as Zoom, Canva or cloud storage. The treatment depends on the trust’s GST status:

Trust’s GST status	Who pays IGST on foreign online subscriptions
Not GST-registered	The foreign supplier, which must register in India; the trust is a “non-taxable online recipient”
GST-registered	The trust, under reverse charge

Hostel and residential accommodation

Hostel accommodation is not a “charitable activity” for GST (CBIC Circular No. 32/06/2018-GST, 12 February 2018). A trust’s hostel is therefore exempt only under the general accommodation exemptions, which have changed twice:

Period	Position
1 July 2017 to 17 July 2022	Exempt if the declared tariff was below Rs. 1,000 per unit per day
18 July 2022 to 14 July 2024	Fully taxable; the Rs. 1,000 exemption was withdrawn
From 15 July 2024 (Entry 12A)	Exempt if the charge is up to Rs. 20,000 per person per month and the stay is at least 90 continuous days

Under the current rule, both conditions must be met. If the total charge, including amenities, exceeds Rs. 20,000 per month, or the stay is shorter than 90 days, GST applies.

Rulings

• Maharashtra Jain Education Society (Maharashtra AAR, 31 July 2024): a 10-month student hostel with compulsory meals was exempt as residential accommodation, and extending a stay by one or two months did not change that. However, separate one- or two-month vacation stays were not exempt.
• K.L.N. Sourashtra College of Engineering Council (Tamil Nadu AAR, 25 September 2025): the hostel exemption depends only on the value and duration tests, whatever the students’ economic status. Where a trust leased a building to another educational institution to house its girl students, with no direct dealing with students, the lease was a taxable renting of property at 18% (9% CGST plus 9% SGST).

Practical point: charge students under a single monthly agreement for the full term, and keep the total within Rs. 20,000 per month.

Free supplies, input tax credit and registration

Free supplies

Supplies made without consideration, such as free meals, medicines or books, generally attract no GST. Schedule I of the CGST Act is the exception: GST applies even without payment to:

• permanently transferring or disposing of business assets on which input tax credit was claimed; and
• supplies to a related person, or between branches registered in different States (distinct persons under Section 25).

Input tax credit

A trust with both taxable and exempt supplies can claim input tax credit only for its taxable supplies. Credit on common inputs, such as shared electricity, repairs or professional fees, must be split and partly reversed under Rules 42 and 43 of the CGST Rules. Trusts should track which costs relate to which activity.

Registration

Type of supplier	Registration threshold (aggregate turnover)
Only goods	Rs. 40 lakh (Rs. 20 lakh in special category States)
Services, or goods and services	Rs. 20 lakh (Rs. 10 lakh in special category States)

Two points often surprise trusts:

• Aggregate turnover includes exempt supplies. A trust with Rs. 50 lakh of exempt hospital income and Rs. 5 lakh of taxable hall rent crosses the Rs. 20 lakh threshold and must register.
• Wholly exempt trusts need not register. If every supply is exempt or outside GST, no registration is needed (Section 23).

Compulsory registration under Section 24 applies regardless of turnover, for example where the trust is liable to pay tax under reverse charge or makes inter-State taxable supplies of goods.

Case study: Travancore Devaswom Board (Kerala AAR, 4 March 2026)

When a temple auctions rights to a contractor, it is usually supplying a taxable licensing service, even if the underlying activity would be exempt when the temple does it itself. That is the key lesson from this ruling.

The Board, a statutory body managing temples in Kerala, regularly auctioned exclusive rights within its temples. The AAR found these organised, recurring, revenue-earning auctions to be business, whatever the religious setting.

Right auctioned	Ruling	Why
Collecting rice and coconuts offered by devotees	Taxable	A licence to collect, not a sale of identified goods; offerings are temple assets, not farm produce
Collecting clothes left by devotees in the Pamba river	Taxable	A commercial licence; the sanitation exemption applies to the service to users, not to the licence
Harvesting coconuts from palms on temple land	Exempt	Directly linked to harvesting agricultural produce (Entry 54)
Performing rituals such as Pulluvanpattu and Balithara	Taxable	The ritual itself may be exempt under Entry 13(a), but licensing a priest to perform it is a separate supply
Running temple toilets and collecting user charges	Taxable	Entry 76 protects the contractor’s service to users, not the Board’s licence to the contractor
Space for pooja-item stalls in temple precincts	Exempt	Renting of precincts under Entry 13(b), if within the limits, such as rent below Rs. 10,000 per month

Temples and religious trusts that outsource activities through tenders should review each contract. Where the trust only grants a right, the consideration is likely taxable, and registration may follow.

Quick GST checklist for trusts

• List every source of income: donations, grants, fees, rent, sales, auctions, events.
• Separate pure donations and grants (no GST) from receipts where the trust gives something in return.
• Confirm the trust’s 12AA/12AB registration is valid, since most trust-specific exemptions depend on it.
• Map each taxable-looking activity to a specific exemption entry and check its limits.
• Review hall, room and shop rents against the Rs. 1,000 per day, Rs. 10,000 per day and Rs. 10,000 per month limits.
• Check hostel charges against the Rs. 20,000 per month and 90-day tests.
• Review donor recognition so it does not become advertising.
• Review tender and auction contracts for licensing income.
• Compute aggregate turnover, including exempt income, against the registration threshold.
• If registered, apportion and reverse common input tax credit under Rules 42 and 43, and pay reverse charge on foreign online subscriptions.

Conclusion: how Rajput Jain & Associates can help

GST treats a charitable trust like any other supplier. Its charitable purpose helps only through specific, narrowly worded exemptions. Advance rulings have repeatedly taxed sales, events, hostels and auctioned rights that trusts assumed were exempt. A structured review of income streams, contracts and registration status is the best protection against notices, interest and penalties.

Rajput Jain & Associates, Chartered Accountants, assists trusts, societies, temples, hospitals and educational institutions with:

• GST applicability reviews and exemption mapping;
• GST registration, returns and input tax credit apportionment;
• review of tenders, leases and donor arrangements;
• advance ruling applications and replies to GST notices;
• Income-tax registration under Sections 12A/12AB and 80G, and FCRA.

To discuss your trust’s GST position, call +91-98-11-322-785, email info@carajput.com, or visit www.carajput.com.

Disclaimer: This article is for general information and is not legal or professional advice. Advance rulings bind only the applicant and the concerned officer. Please consult a professional before acting.