The Gujarat Authority for Advance Ruling (AAR) has in the case of All India Disaster Mitigation Institute has held that a charitable trust registered under Section 12AA and 80G of Income-tax Act, 1961 carrying out charitable activities for preservation of environment, is not required to take GST registration since its activities are exempt from GST.
Facts of the case:
The Applicant M/s All India Disaster Mitigation Institute is a trust duly registered as a charitable trust under Section 12AA and 80G of Income-tax Act. It is engaged in carrying out activities relating to disaster prevention, disaster mitigation and disaster management.
Issues raised for which ruling was sought;
Whether the Applicant is liable for registration under the Central Goods and Services Tax Act, 2017.
Ruling of Gujarat AAR on GST registration of a Charitable Trust:
The Hon’ble Gujarat Authority for Advance Ruling (AAR) in the case of All India Disaster Mitigation Institute held as under:
- The Authority observed from the objectives of the Applicant as described in the Memorandum of Association as well as from the bye-laws of the Applicant, which laid down the modes by which the Applicant can raise funds for its activities as mentioned in foregoing paras that the applicant is a charitable trust registered under the Bombay Public Trust Act, 1950. It was 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. Thus, the Applicant is engaged in training/research relating to disaster prevention, mitigation and management.
- The Applicant is duly registered as a charitable trust under Section 12AA and Section 80G of the Income Tax Act. Therefore, the entire income of the Applicant is exempt from Income Tax, even the donations made to the Applicant are admissible deductions for the donors under Section 80G of the Income Tax Act.
- Serial no. 1 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 clearly provides exemption to services by an entity registered under Section 12AA of the Income-tax Act by way of charitable activities and clause 2(r)(iv) of said Notification includes activities relating to preservation of environment including watershed, forests and wildlife.
- Since the activities of the Applicant relating to disaster prevention, disaster mitigation and disaster management are activities relating to “preservation of environment”, the activities of the Applicant are considered as charitable activities. Hence, activities of the Applicant, being registered under Section 12AA of the Income Tax Act are exempt from tax under the CGST Act, by virtue of serial no. 1 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.
- Consequently, the Applicant is not liable to registration in respect of charitable activities relating to preservation of environment which attracts nil rate of GST, by virtue of Section 23(1)(a) of the CGST Act,2017.
It may be noted here that benefit Section 23(1)(a) of the CGST Act,2017 is admissible irrespective of the aggregate turnover as this Section is overriding Section 22(1) which prescribes that GST registration is required if aggregate turnover exceeds Rs 40 lakhs / 20 lakhs / 10 lakhs.
However the benefit will be available till time the charitable trust is involved purely in charitable activities. If it indulges in any other activity, Section 23 (1)(a) will become in operative and such Trust will be required to take GST registration if its aggregate turnover (which includes exempt supplies) exceeds prescribed limit.
Relevant Statutory provisions:
Persons not liable for registration under GST under Section 23(1)(a) of the CGST Act:
“23. Persons not liable for registration
(1) The following persons shall not be liable to registration, namely:
(a) any person engaged exclusively in the business of supplying goods or services or both that are not liable to tax or wholly exempt from tax under this Act or under the Integrated Goods and Services Tax Act;”
Serial no. 1 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.
| SI. No. | Chapter | Description of Services | Rate | Condition |
| 1 | Chapter 99 | Services by an entity registered under section 12AA of the Income-tax Act, 1961 (43 of 1961) by way of charitable activities. | Nil | Nil |
Meaning of Charitable activities Clause 2(r) of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.
(r) ―charitable activities means activities relating to –
(i) public health by way of, –
(A) care or counselling 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;
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Frah Saeed is a law graduate specializing in the core field of indirect taxes and is the Co-founder of taxwallah.com. She has authored many publications on GST and is into full-time consultancy on GST to big corporates. She as a part of taxwallah.com heads a team comprising of Chartered Accountants and Advocates and plays a key role in our mission to disseminate GST knowledge to all.
