In India, GST is applicable on the supply of goods or services for all businesses or charitable trusts or NGOs or religious establishments unless notified as exempted/Nil through a notification. Charitable trusts/NGOs are required to obtain GST Registration in case they not meeting the conditions specified in the law from time to time if their turnover crosses the specified threshold limit.
Conditions for availing exemption by Charitable Trusts or NGOs or Religious Establishments
- They should be providing services that will benefit society or others.
- They should be registered under Section 12AA of the Income Tax Act 1961.
“Charitable activities” refer to activities related to:
- Public health, including the care and counseling of
- terminally ill individuals or those with severe physical or mental disabilities;
- persons afflicted with HIV or AIDS;
- Public awareness for preventive health, family planning or prevention of spreading of HIV infection
- Advancement of religion, spirituality, or yoga
- Advancement of educational programs or skill development related to
- abandoned, orphaned, or homeless children
- physically or mentally abused and traumatized persons
- persons over the age of 65 years residing in rural areas
- Preservation of the environment, including watersheds, forests, and wildlife.
The GST Registration process for NGOs or Charitable Trusts is similar to other entities, but the additional requirement is obtaining certification under Section 12AA of the Income Tax Act 1961.
Also Read: Benefits Of GST For Small Business
The GST registration process for Charitable Trusts or NGOs or Religious Establishments
- The NGO or trust must obtain a PAN card if they do not have one.
- The authorized signatory of the NGO or trust must obtain a DSC to sign the GST registration application online.
- The NGO or trust must fill GST Registration Form (GST REG-01) online on the GST portal.
- The NGO or trust must upload the required documents, such as a PAN card, proof of address, bank statement, and authorization letter.
- The NGO or trust must submit the application online.
- After submitting the application, the GST officer will verify the details and documents provided by the NGO or trust.
On completion of the verification process, GST Registration Certificate is issued by the concerned officer.
The sale of goods by these entities will attract GST, and GST is also applicable on donations received for other than charitable purposes if the donor’s name is displayed, then it is not treated as a charitable activity, and as such, GST is to be paid.
All these entities are also required to maintain books of accounts and file returns periodically under GST. One of the major challenges is they do not have sufficient funds to employ full-time accountants or experts to maintain their books of accounts. These organizations can use any of the mobile or online billing software like CaptianBiz available in the market.