Services by an Entity Registered under
section 12AA of the Income Tax Act,  1961
by way of Charitable Activities.  
“Charitable activities” as
defined in clause (k) of definitions in the  Notification No. 25/2012-ST, dated 20-6-2012
means activities  relating to –
a). public health by way of –  
b). care or counselling of –  
c). terminally ill persons or persons with
severe physical or mental disability,
persons afflicted with HIV or AIDS, or  
e). persons addicted to a
dependence-forming substance such as narcotics drugs or alcohol; or  
     II). public awareness of preventive
health, family planning or prevention of HIV infection;  
b). advancement of religion or spirituality  
c). advancement of educational programmes
or skill development relating to,-  
     I). abandoned, orphaned or homeless children;
    II). physically or mentally abused and traumatized
   III). prisoners; or
  iv). persons over the age of 65 years residing
in a rural area;
preservation of environment including watershed, forests and wildlife; or  
e). advancement of any other object of
general public utility up to a value of twenty five lakhs rupees in a financial
year subject to the condition that total value of such activities had not
exceeded twenty five lakhs rupees during the preceding financial year.

W.e.f. 1-4-2013, entry in (e) above had
been deleted vide Notification No. 3/2013-ST, dated 1-3-2013. Thus, this
residual clause of general public utility for the purpose of charitable
activities will not be in force. Thus, the benefit to charities providing
services for advancement of any other object of general public utility up-to
Rs. 25 lakhs will not be available. However, the threshold exemption will
continue to be available up to Rs. 10 lakhs.  
For the purpose of this exemption,
‘general public’ means the body of people at large sufficiently defined by some
common quality of public or impersonal nature. (defined in Clause ‘q’ of
definitions in the Notification No. 25/2012-ST, dated 20-6-2012). As
per Oxford Dictionary, charitable means connected with a charity or charities;
Helping people who are poor or in need.  
For this purpose, rural area means the
area comprised in a village as defined in land revenue records, excluding –
the area under any municipal committee, municipal corporation, town area
committee, cantonment board or notified area committee; or  
II). any area that may be notified as an urban
area by the Central Government or a State Government.
a registered entity is doing any activity falling in negative list of services
or otherwise exempt, it is not required to pay service tax on that activity. In
case, where the activity is covered explicitly in any of the specified
charitable activities at ‘a’ to ‘d’, he is exempt from service tax without any
value limit. For charitable activities mentioned at ‘e’ it is exempt up to a
value of twenty five lakhs rupees in a financial year if the total value of
such services had not exceeded twenty five lakhs rupees during the preceding
financial year.
However, if his activity is not for
general public as defined in the notification, he is not eligible for exemption
and required to pay service tax on such activities. General public is defined
in the notification (clause q) as ‘body of people at large sufficiently defined
by some common quality of public or impersonal nature’ with effect from
1-4-2013, exemption under ‘e’ shall not be available.
claim this exemption, following two tests are important –  
a). services should be provided by an
entity registered u/s 12AA of Income Tax Act, 1961, and  
b). services should be charitable
activities. Both the above conditions must be complied with.
may be noted that services provided by way of construction, erection, commissioning,
installation, completion, fitting out, repair, maintenance, renovation or
alteration of a building owned by an entity registered under section 12AA of
the Income Tax Act, 1961 and meant predominantly for religious use by general
public are also exempt under Sr. No. 13(b) of mega exemption Notification No.
25/2012-ST, dated 20-6-2012.
While services provided by the charitable
trusts are not listed in the negative list, mega exemption notification exempts
charitable activities as defined therein if provided by any entity registered
under section 12AA of Income Tax Act, 1961. Charitable trusts could be
registered or unregistered organization.
Following services are covered under
negative list –  
a). Pre-school education, education as a
part of curriculum for obtaining a recognized qualification and approved
vocational educational course (66D-l)  
b). Funeral, burial, crematorium or
mortuary services (66D -q)
Notification No. 25/2012-ST dated
20.06.2012 also contains following exemptions which may or may not be provided
by unregistered charitable organizations –  
 a). veterinary clinic (clause 3)
b). renting of precincts of a religious
place meant for general public or conduct of religious ceremony (clause 5)  
c). training or coaching in recreational
activities in arts, culture or sports (clause 8)
services to or by an educational institution in respect of exempt education
services by way of auxiliary educational service or renting of immovable property
(clause 9)  
e). services provided to a recognized
sports body by another recognized sports body (clause 10)  
f). renting of hotel, inn, guest hose
etc. meant for residential or lodging purposes with declared tariff below Rs.
1000 per day (clause 18)  
g). serving of food etc. in a mess etc.
(clause 19)  
h). services provided to government
authority in relation to functions carried out by municipality for water
supply, public health, sanitation etc. (clause 25)  
(i) public libraries (clause 35)  
(j) public conveniences (clause 38)  
It may be noted that charitable trusts
and unregistered trusts do not enjoy blanket exemption towards the services
received by them. Similarly, wherever reverse charge mechanism is applicable,
there is no specific relief to charitable trusts and unregistered
organizations. Whether trusts is a business entity or not can always be an
issue of litigation if the department takes a different view.  
Services by a Person by way of (a)
Renting of Precincts of a Religious Place meant for General Public; or Conduct
of any Religious Ceremony Services provided by a person in relation
to religious ceremony by way of following shall be exempt from service tax –  
a). renting of precincts of a religious
place meant for general public, or
b). conduct of any religious ceremony  
Religious place is a place which is
primarily meant for conduct of prayers or worship pertaining to a religion.
‘Precincts’ means an area within the
walls or perceived boundaries of a particular building or place; an enclosed or
clearly defined area of ground around a cathedral, church, temple, college etc.
Exemption is available only if the place
is meant for general public. General public is also defined in the mega
notification 25/2012-ST as the body of people at large sufficiently defined by
some common quality of public or impersonal nature.
of religious ceremonies is exempt under Sr. no. 4 of mega exemption. Religious
ceremonies are life-cycle rituals including special religious poojas conducted
in terms of religious texts by a person so authorized by such religious texts.
Occasions like birth, marriage, and death involve elaborate religious

Renting of precinct of a religious place
as well as conduct of any religious ceremony, both shall be exempt. For
example, if a marriage is performed in precincts of a church by renting of that
place, it would be exempt. In certain decided cases, tribunals have held that
marriage is a religious function.
RECOMMENDED READ  Service tax is not leviable under reverse charge mechanism for use of CRS/GDS

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