TaxTMI 
TaxTMI 
Whether any grant-in-aid received from the government / or government body / or Government Board to meet the running expenditure / or working capital attracts GST for a registered dealer?
Applicability of GST on Government Grants
01 May 2026 
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GST on government grants turns on whether the payment is consideration for a specific supply or mere financial assistance.
Grant-in-aid received from Government to meet running expenditure or working capital does not attract GST merely by reason of receipt. GST applies only where the grant is linked to an identifiable supply of goods or services and therefore constitutes consideration. Financial assistance, budgetary support or subsidy without any obligation to supply specific goods, services or outputs falls outside the scope of supply. If the grant is conditional and performance-linked, it may become taxable consideration, depending on the terms of sanction and the nexus with supply. (AI Summary)
Grant-in-aid received from Government to meet running expenditure or working capital does not attract GST merely by reason of receipt. GST applies only where the grant is linked to an identifiable supply of goods or services and therefore constitutes consideration. Financial assistance, budgetary support or subsidy without any obligation to supply specific goods, services or outputs falls outside the scope of supply. If the grant is conditional and performance-linked, it may become taxable consideration, depending on the terms of sanction and the nexus with supply. (AI Summary)