The VakilKaro Brief The Update Gujarat AAR held that tree plantation and maintenance carried out by a 12AB registered trust qualifies as charitable activity and is exempt from GST. Background of the Case The applicant, a charitable trust registered under Section 12AB of the Income Tax Act, was engaged in large-scale tree plantation and maintenance activities.
Green Work, Zero Tax- AAR Gives Clarity
Environmental work done by genuine charitable trusts gets GST relief, reinforcing the intent behind tax exemptions.
Key Takeaways
- The VakilKaro Brief The Update Gujarat AAR held that tree plantation and maintenance carried out by a 12AB registered trust qualifies as charitable activity and is exempt from GST.
- Background of the Case The applicant, a charitable trust registered under Section 12AB of the Income Tax Act, was engaged in large-scale tree plantation and maintenance activities.
- The trust approached the Authority for Advance Ruling seeking clarity on whether such services would qualify as “charitable activities” and thereby be exempt from GST under Notification No.
- Issue Before the AAR The primary question was whether plantation and maintenance of trees carried out by a registered charitable trust could be treated as a “charitable activity” relating to preservation of environment.
- It confirms that activities like tree plantation, afforestation, and maintenance are not treated as taxable services when carried out as part of genuine charitable objectives.
The VakilKaro Brief
The Update
Gujarat AAR held that tree plantation and maintenance carried out by a 12AB registered trust qualifies as charitable activity and is exempt from GST.
The Impact
Provides clarity for NGOs and trusts engaged in environmental work, ensuring tax relief where activities align with preservation goals.
The Action
Charitable institutions must ensure proper registration and alignment with notified activities to claim GST exemption.
Background of the Case
The applicant, a charitable trust registered under Section 12AB of the Income Tax Act, was engaged in large-scale tree plantation and maintenance activities. The trust was selected under the Gujarat Government’s Harit Van Path Yojna, a public-private initiative aimed at increasing green cover across roads, highways, and unused land.
Under this project, the trust was responsible not only for planting trees but also for maintaining them for two years, ensuring survival, growth, and proper environmental upkeep. The activity involved substantial operational work including soil preparation, watering, fertilisation, pest control, and monitoring.
The trust approached the Authority for Advance Ruling seeking clarity on whether such services would qualify as “charitable activities” and thereby be exempt from GST under Notification No. 12/2017.
Issue Before the AAR
The primary question was whether plantation and maintenance of trees carried out by a registered charitable trust could be treated as a “charitable activity” relating to preservation of environment.
A related issue was whether such activity would attract GST or qualify for complete exemption.
Legal Framework
The case revolved around Entry No. 1 of Notification No. 12/2017-CT(R), which grants GST exemption to services provided by entities registered under Section 12AA or 12AB of the Income Tax Act, provided such services qualify as “charitable activities.”
The notification defines charitable activities to include preservation of environment, including forests, wildlife, and ecological balance.
Therefore, two conditions must be satisfied. First, the entity must be registered under Section 12AA or 12AB. Second, the activity must fall within the defined scope of charitable activities.
AAR’s Reasoning
The Authority noted that the applicant trust held valid registration under Section 12AB, thereby satisfying the first condition.
On the nature of the activity, the AAR observed that large-scale plantation and maintenance of trees directly contributes to environmental preservation. The project aligned with national environmental policies and state initiatives aimed at increasing green cover and ecological balance.
The Authority also emphasised that such work is not merely contractual or commercial in nature, but intrinsically linked to environmental protection. The requirement to ensure survival of trees and long-term maintenance further reinforced its charitable character.
Conditions for Exemption
The ruling makes it clear that exemption is not automatic for all activities of a trust. It applies only when specific conditions are met.
The entity must have valid 12AA or 12AB registration.
The activity must fall strictly within the definition of charitable activities, particularly preservation of environment in this case.
The services should not be in the nature of pure commercial supply disconnected from charitable objectives.
Once these conditions are satisfied, GST exemption applies in full.
Key Takeaway
The ruling provides much-needed clarity for NGOs and charitable institutions involved in environmental work.
It confirms that activities like tree plantation, afforestation, and maintenance are not treated as taxable services when carried out as part of genuine charitable objectives.
This aligns taxation policy with environmental goals, encouraging more participation in sustainability projects without tax burden.
Conclusion
This decision reinforces the broader intent of GST law- to support genuine charitable activities while maintaining clarity on taxability.
For trusts and NGOs, the message is straightforward. If the work is genuinely aimed at environmental preservation and backed by proper registration, GST should not stand in the way.
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Tree Plantation by Charitable Trust Exempt from GST: Gujarat AAR Clarifies+
The VakilKaro Brief The Update Gujarat AAR held that tree plantation and maintenance carried out by a 12AB registered trust qualifies as charitable activity and is exempt from GST. Background of the Case The applicant, a charitable trust registered under Section 12AB of the Income Tax Act, was engaged in large-scale tree plantation and maintenance activities.