{"id":33328,"date":"2026-10-04T20:42:27","date_gmt":"2026-10-04T15:12:27","guid":{"rendered":"https:\/\/carajput.com\/blog\/?p=33328"},"modified":"2026-10-04T20:42:27","modified_gmt":"2026-10-04T15:12:27","slug":"gst-on-charitable-and-religious-trusts","status":"publish","type":"post","link":"https:\/\/carajput.com\/blog\/gst-on-charitable-and-religious-trusts\/","title":{"rendered":"GST on Charitable and Religious Trusts"},"content":{"rendered":"

GST on Charitable and Religious Trusts: Exemptions, Rulings and Compliance Explained<\/strong><\/h2>\n

Do charitable trusts pay GST? The short answer<\/strong><\/p>\n

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.<\/p>\n

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.<\/p>\n

When does GST apply to a trust?<\/strong><\/p>\n

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<\/strong>, for a consideration<\/strong>, in the course or furtherance of business<\/strong>. A charitable trust usually meets all three.<\/p>\n\n\n\n\n\n\n
Test<\/strong><\/td>\nWhat the law says<\/strong><\/td>\nDoes a trust meet it?<\/strong><\/td>\n<\/tr>\n
Person (S.2(84))<\/td>\nExpressly includes a trust, a society registered under the Societies Registration Act, 1860, a co-operative society and a company<\/td>\nYes, by name<\/td>\n<\/tr>\n
Business (S.2(17))<\/td>\nAny 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<\/td>\nOften yes, since profit motive is irrelevant<\/td>\n<\/tr>\n
Consideration (S.2(31))<\/td>\nAny 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<\/td>\nYes, whenever the trust receives something in return<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The “business” debate<\/strong><\/p>\n

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.<\/p>\n

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.<\/p>\n

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.<\/p>\n

Bottom line:<\/strong> assume GST applies to anything a trust sells or provides for a price, and then look for a specific exemption.<\/p>\n

Donations and grants: no GST unless something is given in return<\/strong><\/p>\n

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.<\/p>\n

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

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

    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.<\/p>\n

    Government grants.<\/strong> 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.<\/p>\n

    The charitable activities exemption (Entry 1)<\/strong><\/p>\n

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

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

      The GST definition is much narrower than the income-tax meaning of charity. Paragraph 2(r) covers only:<\/p>\n\n\n\n\n\n\n\n
      Category<\/strong><\/td>\nWhat is covered<\/strong><\/td>\n<\/tr>\n
      Public health<\/td>\nCare 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<\/td>\n<\/tr>\n
      Religion<\/td>\nAdvancement of religion, spirituality or yoga<\/td>\n<\/tr>\n
      Education and skills<\/td>\nAdvancement 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<\/td>\n<\/tr>\n
      Environment<\/td>\nPreservation of the environment, including watersheds, forests and wildlife<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

      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.<\/p>\n

      What the advance rulings say<\/strong><\/p>\n\n\n\n\n\n\n\n
      Ruling<\/strong><\/td>\nActivity<\/strong><\/td>\nOutcome<\/strong><\/td>\n<\/tr>\n
      Polaris Foundation (Tamil Nadu AAR, 6 June 2023)<\/td>\nPublic awareness on COVID-appropriate behaviour and infection control<\/td>\nExempt, as preventive health awareness<\/td>\n<\/tr>\n
      Ecosan Services Foundation (Maharashtra AAR, 19 December 2018)<\/td>\nSanitation capacity building, training and research on water management<\/td>\nExempt, as preservation of environment<\/td>\n<\/tr>\n
      All India Disaster Mitigation Institute (Gujarat AAR, 11 September 2019)<\/td>\nResearch and technical help on disaster prevention and management<\/td>\nExempt, as preservation of environment<\/td>\n<\/tr>\n
      Dream Runners Foundation (Tamil Nadu AAR, 22 January 2019)<\/td>\nCharity half-marathon funded by runners’ and corporate “donations”<\/td>\nTaxable: organising a marathon is a separate service to participants, even if surplus goes to charity<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

      The lesson from Dream Runners: what matters is the service the trust actually provides, not where the money ends up.<\/p>\n

      Religion, spirituality, yoga and temple premises<\/strong><\/p>\n

      Programmes and camps<\/strong><\/p>\n

      CBIC Circular No. 66\/40\/2018-GST dated 26 September 2018 clarifies where the line falls:<\/p>\n\n\n\n\n\n
      Exempt<\/strong><\/td>\nTaxable<\/strong><\/td>\n<\/tr>\n
      Fees from participants in a religious, yoga or meditation programme or camp for advancement of religion, spirituality or yoga<\/td>\nA trust that merely or mainly provides accommodation, or food and drinks, for any consideration, including a “donation”<\/td>\n<\/tr>\n
      Residential programmes where the fee includes boarding and lodging, provided the main purpose is advancing religion, spirituality or yoga<\/td>\nFitness camps, and classes in aerobics, dance, music and the like<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

      Religious ceremonies and renting of precincts (Entry 13)<\/strong><\/p>\n

      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.<\/p>\n

      The renting exemption does not<\/strong> apply to:<\/p>\n