The Maharashtra Bench of AAR in the case of Jaishankar Gramin VA Adivasi Vikas Sanstha vide order dated 10th November 2021 has held that the amount received by the said NGO from Central and/or State Government towards some charitable activities which are not exempted from the purview of GST.

According to the relevant notification, the AAR held that these services, specifically in the context of advertising where the donor's nameplate is affixed in lieu of the donation, are subject to GST at a rate of 18%.

Jaishankar Gramin Va Adivasi Vikas Sanstha Sangamner, a charitable trust registered under the Maharashtra Public Charitable Trust Act 1950 and the Income Tax Act, sought clarity from the AAR on whether it is obligated to pay GST on funds received as donations or grants from various entities, including the Central and State governments. The trust provides services to 50 orphans and homeless children, covering shelter, education, guidance, clothing, food, and health for women and child welfare. The Maharashtra Women and Child Welfare Department contributes ₹2,000 per month per child, with other expenses funded through donations.

The AAR ruling states that the trust is liable to pay 18% GST on grants received. Regarding donations, the AAR clarified that if the donation serves a philanthropic purpose, does not yield commercial gains, and is not considered an advertisement, it would be exempt from GST. However, in all other cases, donations would attract an 18% GST.

Senior Partner at AMRG & Associates, Rajat Mohan, expressed concern that this ruling could impact charitable trusts, potentially requiring them to register under GST. He emphasized that this may pose challenges for organizations previously enjoying tax-neutral status, leading to potential tax demands with additional interest and penalties dating back to 2017.

In conclusion, this AAR ruling has raised apprehensions among charitable organizations, signaling a potential shift in their tax status under GST regulations since July 2017.