Is GST applicable on GRANT received by a Society

Dear Sir,

We are a Society registered under Societies Registration Act, 1860. Majorly, our receipts are GRANTs, both FCRA and non-FCRA.

We are registered under GST. Want to know, whether GST applicable on a GRANT (both FCRA and non-FCRA grants)?

Regards

Prabhat

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7 Responses to Is GST applicable on GRANT received by a Society

  1. Subhash Mittal says:

    As already explained by other esteemed SRRF Dialogue members, GST is not applicable on Grants, where it can be established that this is not in ‘furtherance of business’ (S.7 CGST Act) & that Grant is a voluntary donation by the donor for helping NGO undertake certain philanthropic activities as per its objectives. Therefore as Ritesh says below it is most important that Grant Agreement should be drafted carefully. Any conditions for reporting to the donor is not an issue, as that just confirms if funds are being properly utilised. Avoid too much emphasis on branding, if necessary make separate agreement for the same.

  2. Is any circular regarding 12 AA registered NPO not liable for GST registration.

  3. J.SEBASTIN says:

    Dear Mr.Soma Sastry
    Can you please share the CGST Notification as said by you.

  4. Shobha Javalgikar says:

    From above analysis, it is pretty much clear that, since one of the three factors of “Supply”, that is, ‘Consideration’ does not come into play in case of Donations, GST should not be leviable on Donations. On the other hand, supply of goods or services to beneficiaries at free of cost should again not be liable to GST in absence of ‘Consideration’.
    This comment I found when searching on net is GST APPLICABLE FOR DONATIONS,IN THE SECTION OF RULES & REGULATIONS OF GST.

  5. ritesh katuwal says:

    Dear Mr. Prabhat,

    Firstly in any transaction where GST applies, it is irrelevant that the money involved is FC or LC.

    GST is applicable of supply of taxable goods and services.

    Now regarding your query whether GST is applicable on Grant depends entirely upon the nature of the work that you are going to do with that Grant and the way you have framed your agreement. You have to be very careful while drafting the agreement and avoid using words like fees, consultancy etc. It should not be perceived that you are doing any consultancy services to the donor in the guise of Grant (for e.g. exclusive research which will be used by the donor). Also it should not be perceived that you are promoting the donor for e.g. putting up banners in your project areas with the name of the donor, merchandising etc. Further it is advisable to avoid too many conditions by the donor for utilisation of Grant. Also please avoid deduction of TDS on your Grants which happens sometimes with CSR grants.

    There is no set rule to determine whether GST is applicable or not but the way agreements for Grant are drafted and the true intention of the work required to be done might be perceived as being a service that attracts GST.

    Hope this provides some light to your query.

    Best Wishes,

    Ritesh Katuwal

    Chartered Accountant

  6. GRANTEES SOCIETY’S CAN NOT BE COME UNDER GST . IT IS PROFIT AND NONPROFIT BUSINESS ACTIVITIES APLICABLE BUSINESS PROFIT CAN BE UTALISED FOR CHARITIS UNDER PRIVILEGE PEOPLE DEVELOPMENT GST EXEMPTED BUT ALL TYPE OF FIRMS SHUOLD HAVE TO GET REGISTERED GST IT IS VERY NICE TO ACCOUNTABILITY.

  7. B V Soma Sastry says:

    Dear Prabhat,

    To the best of my understanding, GST will not be applicable to grants per se. This understanding is based on the fact that for GST to be applicable, the concept of “Supply” and “Quid pro Quo” needs to be established with profit motive not being the only criteria. Many of the supplies carried out by the NPOs are not covered in GST or are part of Nil GST.

    There is also a notification from the CGST notification which exempts services by way of Charitable Activities by NPOs registered under Section 12AA of the IT Act. The definition covers the activities that were covered under the Service Tax Act.

    Most of the activities of the NPOs are generally exempted. However there are certain activities that can attract GST

    Thanks and regards,

    B V Soma Sastry

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