In a landmark decision that could boost environmental conservation efforts nationwide, the Gujarat Authority for Advance Ruling (AAR) granted GST exemption to a city-based NGO for its mangrove afforestation project on Gujarat’s coast, recognising it as a “charitable activity.”
“This decision acknowledges that environmental preservation activities, particularly those related to forest and watershed conservation, fall under charitable activities,” said Rajesh Shah, managing trustee of Vikas Centre for Development (VCD).
The AAR’s decision hinged on two findings. First, VCD’s activities don’t qualify as “business” under the GST Act as they are not profit-oriented. Second, there’s no “supply” for consideration, a prerequisite for GST applicability. “Supply” under the GST Act requires a transaction to be in the course or furtherance of “business” and involve consideration.
VCD’s project, which aims to plant 1.25 million mangrove saplings over three years, stands out as a project for “public welfare,” according to Gujarat AAR. The mangrove project is expected to generate 38,500 person-days of employment, benefiting 210 rural families with 200 workdays annually. “Almost, 80% of the project cost is allocated to labour wages, demonstrating its strong social impact,” states a VCD press release.
“We understand industrial and port development are important for growth, but the livelihoods of people whose livelihoods are based on natural resources need to be saved,” says Shah. He adds, “For coastal communities, particularly fishermen and farmers, the project offers sustainable livelihood opportunities through improved fishing grounds and fodder availability for livestock.”
The initiative also promises to reduce soil salinity and improve seawater quality.