{"id":34497,"date":"2021-08-17T11:36:48","date_gmt":"2021-08-17T06:06:48","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=34497"},"modified":"2021-08-17T11:36:50","modified_gmt":"2021-08-17T06:06:50","slug":"gst-for-ngo-analyzing-the-complete-applicability","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/gst-for-ngo-analyzing-the-complete-applicability\/","title":{"rendered":"GST for NGOs: Analyzing the Complete Applicability"},"content":{"rendered":"\n<p class=\"has-drop-cap\">After the advent of GST for NGO, the two taxes, i.e. VAT and Service tax have been combined to reduce the burden on the taxpayers. GST implementation was nothing short of a breakthrough for our country since it has simplified the overall tax structure.<\/p>\n\n\n\n<p>The\nadvent of GST has a considerable impact on avenues that work for society\u2019s\nbetterment, broadly known as NGOs, trust, societies etc.<\/p>\n\n\n\n<p>As\nper the GST law, any trade, commerce, manufacture, vocation, profession,\nvocation or not it is for fiscal benefit comes under the GST\u2019s ambit.&nbsp;<\/p>\n\n\n\n<p>In\nlight of this, the fiscal benefit cannot be the only basis for defining the\nterm business under GST. The Charitable &amp; philanthropic undertaking also\ncome under GST as a business.&nbsp;<\/p>\n\n\n\n<p>However,\nwhat is exempted has to be determined under GST in the NGO\u2019s category.&nbsp;<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/gst-for-ngo-analyzing-the-complete-applicability\/#GST_for_NGO\" >GST for NGO<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/gst-for-ngo-analyzing-the-complete-applicability\/#Who_are_eligible_for_such_an_Exemption\" >Who are eligible for such an Exemption?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/gst-for-ngo-analyzing-the-complete-applicability\/#Role_of_Section_12AA\" >Role of Section 12AA<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/gst-for-ngo-analyzing-the-complete-applicability\/#Is_GST_registration_is_a_mandate_for_Non-profit_entities\" >Is GST registration is a mandate for Non-profit\nentities?&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/gst-for-ngo-analyzing-the-complete-applicability\/#An_overview_on_past_notifications_waiving_off_GST_for_NGOs\" >An overview on past notifications waiving off GST for NGOs<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/corpbiz.io\/learning\/gst-for-ngo-analyzing-the-complete-applicability\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"GST_for_NGO\"><\/span>GST for NGO<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In Non-Governmental entities, GST applies to taxable goods &amp; services. An exemption is accessible to the taxpayer under GST, given in Section 12AA of the Income Tax Act, 1961.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/apply-for-gst-registration-certificate-online\/\">How to apply for GST registration certificate online? <\/a><\/mark><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Who_are_eligible_for_such_an_Exemption\"><\/span>Who are eligible for such an Exemption?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>Entities\nthat come under the ambit of Section 12AA<\/li><li>Such\nservices via charitable activities<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Role_of_Section_12AA\"><\/span>Role of Section 12AA<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>An\nNGO as per IT Act, 1961 is specified in Section 12AA. It clearly states that\nany entity working for the charitable cause can avail exemption under IT Act,\n1961.&nbsp;<\/p>\n\n\n\n<p>To\navail GST\u2019s benefits, it must meet the requirement for registration under the\nsaid Act and GST law.&nbsp;<\/p>\n\n\n\n<p><strong><em>Following are the list of undertakings that are eligible for exemption as per Section 12AA<\/em><\/strong><\/p>\n\n\n\n<ul><li>Public Health services for<\/li><li>Critically ill individuals with a severe mental or physical disability.<\/li><li>Individuals who have HIV.\u00a0<\/li><li>Conducting mass awareness programmes for family planning and preventive health measure.\u00a0<\/li><li>Advocating holistic awareness, religion, spirituality, or yoga.<\/li><li>Rendering Education to orphan children, physically or mentally tormented or prisoners or senior citizens.\u00a0<\/li><li>The entity conducting an awareness program related to wildlife or environment protection.<\/li><li>In the purview of the CBDT\u2018s notification, viz\u00a012\/2017 Central Tax Rate, all general exemptions do not apply to the Non-profit entities,\u00a0<\/li><\/ul>\n\n\n\n<p><strong><em>The\nexemptions which come under the general category of exemptions relating\nto&nbsp;charitable purposes are:<\/em><\/strong><\/p>\n\n\n\n<ul><li>Coaching &amp; Training activities- recreational undertakings, such as culture, art, sports in section 12AA of income tax Act, 1961 (1).\u00a0<\/li><li>Public library<\/li><li><strong><em>Health care<\/em><\/strong><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/Health_care\"><strong><em>[1]<\/em><\/strong><\/a><\/sup><\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Is_GST_registration_is_a_mandate_for_Non-profit_entities\"><\/span>Is GST registration is a mandate for Non-profit\nentities?&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Indeed,\nit is based on the income generated by the NGOs.&nbsp;<\/p>\n\n\n\n<p>The applicability of <a href=\"https:\/\/corpbiz.io\/gst-registration\"><strong>GST registration<\/strong><\/a> on NGOs is determined using the term Income. The term income is used differently here for non-profit organizations.\u00a0<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Threshold limitation- General Rule<\/h3>\n\n\n\n<p>Every\nStatute facilitates the minimal amount on which a taxpayer is mandated to pay\ntax.&nbsp;<\/p>\n\n\n\n<p>Under GST, the threshold limit has been capped at Rs 20 lakhs. This implies that if any registered NGO has an overall turnover of less than Rs 20 lakhs, it is unnecessary to avail the <a href=\"https:\/\/corpbiz.io\/ngo-registration\"><strong>NGO registration<\/strong><\/a> under the statute.\u00a0<\/p>\n\n\n\n<p>For\nthis section 2(6) of Central Goods &amp; Services, 2017 has specified the term\nAggregate Turnover. The said term implies the taxable supplies, non-taxable\nsupplies, exportation of goods &amp; services at an inter-state level to the\nestimated pan India.&nbsp;<\/p>\n\n\n\n<p><strong><em>Therefore,\nGST registration is a legal mandate for NGOs which are;&nbsp;<\/em><\/strong><\/p>\n\n\n\n<ul><li>Making\ntaxable supply of goods &amp; services. Those supplies do not come under\nSection 12AA.<\/li><li>Earning\nmore than Rs 20 lakhs of Aggregate Turnover&nbsp;&nbsp;<\/li><\/ul>\n\n\n\n<p><strong><em>Keep in mind\nthat for the states like Arunachal Pradesh, Mizoram, and Assam, this said limit\nhas been slashed down to Rs 10 lakhs.&nbsp;<\/em><\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Compulsory Registration<\/h3>\n\n\n\n<p>NGOs\ngenerating less than 20 lakhs of aggregate turnover is also liable to avail GST\nregistration, if<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img decoding=\"async\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/08\/Compulsory-Registration.png\" alt=\"Compulsory Registration\" class=\"wp-image-34505\" width=\"457\" height=\"468\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/08\/Compulsory-Registration.png 777w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/08\/Compulsory-Registration-293x300.png 293w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/08\/Compulsory-Registration-768x787.png 768w\" sizes=\"(max-width: 457px) 100vw, 457px\" \/><\/figure><\/div>\n\n\n\n<h3 class=\"wp-block-heading\">No registration required<\/h3>\n\n\n\n<ul><li>An\nNGO is dealing with the goods and services that fall outside the GST\nregime.&nbsp;<\/li><li>Non-registered\nNGOs&nbsp;need not avail registration<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"An_overview_on_past_notifications_waiving_off_GST_for_NGOs\"><\/span>An overview on past notifications waiving off GST for NGOs<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In\npast, the government has released several notifications that aims to isolate\nNGOs from GST provisions <\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Charitable trust<\/h3>\n\n\n\n<p>If\nthe charitable trust facilitates services like residential or non-residential\nyoga camps by procuring funds via donation, it will be subjected to GST\ntaxation. Unlike spirituality, yoga, procuring donation is a different\nundertaking altogether because it is attached with an element of\ncommercialization.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Health care facilities<\/h3>\n\n\n\n<p>No\ntaxation will be levied on clinical establishments which facilitate legitimate\nmedical services such as transportation of patients to hospitals. Furthermore,\nveterinary services offered by the charitable trust are not taxable.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Donations received<\/h3>\n\n\n\n<p>The\ndonations received by charitable trusts and NGOs shall not be subjected to\ntaxation. Since the contribution has nothing to do with term business, the\ntaxation paradigm doesn\u2019t fit this context.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Interest income<\/h3>\n\n\n\n<p>The\ninterest income generated by NGOs by way of loan extension or deposits is\ntaxable. However, the incomes received under recurring deposits\/FDs\/savings are\nnot subjected to taxation.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Training or recreational activities<\/h3>\n\n\n\n<p>Training\/Coaching\nfacilitated by the institution in art, dance, music, institution or any sports\nshall confront no tax liabilities under GST.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Participation in events<\/h3>\n\n\n\n<p>If\nthe organization participates in the events like theatre, plays, a drama that\ninvolve some monetary transactions in terms of fees, it shall come under the\nambit of GST.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The impact of GST for NGO is more or less a positive one, considering the provisions that exist under the general bylaws. GST doesn\u2019t necessarily tax NGOs in a harsh way. It keeps the core social activities out of the equation and taxes only areas that fit with existing norms of the GST laws.\u00a0<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/obtain-gst-registration-in-india\/\">How To Obtain GST Registration in India? <\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>After the advent of GST for NGO, the two taxes, i.e. VAT and Service tax have been combined to reduce the burden on the taxpayers. GST implementation was nothing short of a breakthrough for our country since it has simplified the overall tax structure. The advent of GST has a considerable impact on avenues that [&hellip;]<\/p>\n","protected":false},"author":22,"featured_media":34509,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[16],"tags":[1919],"acf":{"service_id":"96"},"authorName":"Pankaj Tyagi","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/01\/MicrosoftTeams-image-42.jpg","authorDescription":"Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.","postViews":6764,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/34497"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/22"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=34497"}],"version-history":[{"count":15,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/34497\/revisions"}],"predecessor-version":[{"id":34515,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/34497\/revisions\/34515"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/34509"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=34497"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=34497"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=34497"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}