GST Exemption and Input Tax Credit for Services to Government Societies
Services provided to government-controlled societies are taxable, but providers can claim full input tax credit on their own business expenses.
- Ruling
- ADVANCE RULING No. KER/ 35/2025 Dated 10.10.2025
- Dated
- 10 Oct 2025
- Authority
- Authority for Advance Ruling
This page was written by Patron Accounting’s AI from the official release and reviewed before publishing. It explains the document in plain language. It is not the document itself. Where this page and the original differ, the original governs.
The short version
- ICTAK asked if services to K-DISC were exempt from GST.
- The Authority ruled K-DISC is a society, not a government department.
- Services provided to K-DISC are taxable, not exempt.
- ICTAK can claim full input tax credit on its subcontracted services.
In short
The Information and Communication Technology Academy of Kerala (ICTAK) asked the Authority for Advance Ruling if its training services for the Kerala Development and Innovation Strategic Council (K-DISC) were exempt from Goods and Services Tax (GST). Because K-DISC is a registered society rather than a government department, the authority decided the services are taxable. However, because the services are taxable, the provider is allowed to claim input tax credit for the costs of their own subcontractors.
What has changed
How it worked before
Many businesses assumed that services provided to government-controlled societies or councils were exempt from GST, similar to services provided directly to government departments.
What has changed
The ruling clarifies that a society, even if funded and controlled by the state, is a separate legal entity. It does not qualify for the specific GST exemptions reserved for government departments. Consequently, businesses must charge GST on these services, but they gain the right to claim input tax credit on their own business expenses.
Who this affects
Private companies or training providers that deliver services to government-backed societies, councils, or autonomous bodies.
An example
Imagine a private firm provides software training to a state-run sports council. The firm might wonder if they should charge GST. Based on this ruling, the firm should likely charge GST because the council is a society, not a government department. The firm can then claim input tax credit on the GST paid to their own trainers or software vendors.
What you should do
If you provide services to a government society, do not assume your services are exempt from GST. This ruling only applies to the specific company that asked the question; it is not a general law. Consult with your tax advisor to determine if your specific contract qualifies for an exemption or if you should be charging GST.
If you do nothing
If you incorrectly assume your services are exempt, you may fail to collect GST from your client. If a tax officer later decides your services were taxable, you will be liable for the unpaid tax, interest, and potential penalties. This can create a significant financial burden that your client may refuse to cover after the fact.
The terms explained
- Input Tax Credit
- A system that allows a business to reduce the tax they pay on their own sales by the amount of tax they already paid on their business purchases.
- Advance Ruling
- A formal decision from tax authorities on how GST laws apply to a specific business situation. It is only binding for the business that requested it.
- Society
- An organization registered under specific laws, like the Societies Registration Act, which functions as a separate legal entity from the government.
The ruling in detail
Authority for Advance Ruling
Information and Communication Technology Academy of Kerala
ADVANCE RULING No. KER/ 35/2025 Dated 10.10.2025 · Keralam
Questions before the authority
- Whether the supply of services provided by Information and Communication Technology Academy of Kerala (ICTAK) to Kerala Development and Innovation Strategic Council (K-DISC), which functions under the aegis of the Kerala Government for advancement of technology and innovation, is eligible for exemption from GST?
- Whether ICTAK is eligible to claim Input Tax Credit (ITC) on the GST charged on goods and services procured from subcontractors for providing services to Kerala Development and Innovation Strategic Council (K-DISC)?
Facts
The applicant, ICTAK, is a private limited company providing skill development and training services to K-DISC under various Memoranda of Understanding. K-DISC is a society registered under the Travancore-Cochin Literary, Scientific and Charitable Societies Act, 1955, and functions under the administrative control of the Government of Kerala. The applicant sought a ruling on whether these services are exempt from GST and whether they can claim ITC on inputs procured from subcontractors.
Ruling
| Question | What the authority ruled |
|---|---|
| Exemption from GST for services provided to K-DISC | Not eligible for exemption K-DISC is a society and not a Government Department or local authority |
| Eligibility to claim Input Tax Credit | Eligible to claim full Input Tax Credit Subject to verification of proper tax invoices and compliance with CGST Act and Rules |
The Authority ruled that the services provided by ICTAK to K-DISC are not eligible for GST exemption as K-DISC does not qualify as a Government Department or local authority. However, the Authority held that since the services provided by ICTAK are taxable, the applicant is eligible to claim full Input Tax Credit on GST charged by subcontractors for these projects.
Reasoning
The Authority determined that K-DISC, being a society, is a distinct legal entity and does not fall within the definition of Government or Government Department under the CGST Act. Consequently, the exemption under Entry 72 of Notification No. 12/2017-Central Tax (Rate) is not applicable. Furthermore, the Authority noted that amendments to Notifications 3 and 3A removed the benefit for Governmental Authorities and Entities. Since the services are taxable, the applicant is entitled to claim ITC under Section 16(1) of the CGST Act for inputs used in the course of business.
Provisions relied on
- Section 16(1) of the CGST Act, 2017
- Section 17(2) of the CGST Act, 2017
- Section 97(2) of the CGST Act, 2017
- Entry 72 of Notification No. 12/2017-Central Tax (Rate)
- Notification No. 16/2021-Central Tax (Rate)
- Notification No. 13/2023-Central Tax (Rate)
For the practitioner
This ruling clarifies that services provided to societies, even if fully funded and controlled by the State Government, do not automatically qualify for **GST exemption** reserved for Government Departments. It confirms that where services are held to be taxable, the service provider is entitled to **full Input Tax Credit** on subcontracted services. Practitioners should note that the status of the recipient as a 'Government Department' is strictly interpreted.
Source
This is a summary prepared from the published order, which is a scanned document. It is a reading aid and not the authority: where the two differ, the order governs. Verify every provision against the original before relying on it.
Original order: https://www.gstcouncil.gov.in/sites/default/files/AAR/6-information_and_communication_technology_academy_of_kerala.pdf
Legibility of the scan, as read: high.
Prepared 15-10-2026.
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