The Institute of Chartered Accountants of India has issued a comprehensive “GST Sectoral Guide on Charitable Trusts and NPOs” to assist charitable institutions, trustees, professionals and other stakeholders in understanding the application of Goods and Services Tax to the non-profit sector.
The Guide has been released by the GST & Indirect Taxes Committee of ICAI as the first booklet under its Industry-Specific GST Publication Series. It seeks to provide sector-focused guidance on the practical GST issues and compliance obligations applicable to charitable trusts and non-profit organisations.
The ICAI has clarified that registration of an organisation under the Income-tax Act for charitable or religious purposes does not automatically grant exemption from GST. While income-tax exemptions are generally linked to the charitable character and objects of an entity, GST exemption depends on the nature of each individual supply or activity undertaken by the organisation.
According to the Guide, a charitable institution may simultaneously carry out activities that are exempt from GST, taxable under GST or outside the scope of GST. Each receipt or transaction must therefore be examined separately on the basis of the nature of the activity, existence of consideration and availability of a specific exemption.
The publication explains that voluntary donations and unconditional grants received without any corresponding obligation or benefit to the donor would generally not constitute consideration for a supply and may remain outside the GST framework. However, where the donor receives naming rights, sponsorship benefits, event access, publicity or another identifiable benefit, the receipt may be treated as consideration for a taxable supply.
The Guide discusses the GST treatment of major revenue sources of charitable organisations, including corpus contributions, government grants, corporate social responsibility funds, membership subscriptions, educational and training fees, hostel receipts, rental income, healthcare receipts, sale of publications and foreign contributions.
It also provides detailed guidance on the scope of “supply” under Section 7 of the Central Goods and Services Tax Act, 2017. Activities undertaken for consideration in the course or furtherance of business may attract GST even where the organisation does not operate with a profit motive.
The ICAI has highlighted that the definition of “business” under GST includes activities undertaken whether or not for pecuniary benefit. Consequently, the non-profit nature of an organisation, by itself, does not exclude its transactions from the scope of GST.
The Guide further explains that services provided by an entity registered under Sections 12AA or 12AB of the Income-tax Act are exempt only where the services qualify as “charitable activities” under the relevant GST exemption notification. The scope of charitable activities under GST is narrower and more specific than the concept of charitable purpose under income-tax law.
The publication examines the GST implications of activities relating to public health, advancement of religion, spirituality or yoga, specified educational or skill-development programmes and preservation of the environment.
It also covers the registration obligations of charitable trusts and NPOs. Taxable supplies, exempt supplies, exports and inter-State supplies may form part of aggregate turnover for determining the registration threshold, while unconditional donations that do not constitute supplies are generally excluded.
The Guide addresses the applicability of the reverse charge mechanism to common procurements made by charitable institutions, including legal services, goods transport agency services, sponsorship, security services and renting of immovable property in specified cases.
Special attention has been given to digital services and Online Information and Database Access or Retrieval services. The publication explains the tax treatment of foreign software subscriptions, cloud storage, webinar platforms, website hosting, online databases, recorded lectures, digital courses and downloadable publications.
The ICAI has also discussed the availability and restriction of input tax credit where charitable institutions undertake both taxable and exempt activities. It provides guidance on the need for proportionate reversal of credit and maintenance of appropriate records.
The publication is structured into four chapters covering the background of the charitable and non-profit sector, statutory provisions, judicial decisions and advance rulings, and key sectoral considerations relating to education, healthcare, religious activities, donations, grants and CSR funds.
The Guide includes practical illustrations, comparative tables, case-law analysis and compliance guidance intended to assist chartered accountants, trustees, administrators, legal professionals and stakeholders associated with the non-profit sector.
The Guide can be accessed at: https://a2ztaxcorp.net/wp-content/uploads/2026/07/GST_Sectoral_Guide_on_Charitable_Trust_and_NPOs_June_1st_2026_Edition.pdf
