Charitable activities - Service Tax Practice Manual / Ready Reckoner - Service Tax

Chapter 4 Charitable activities Effective date: (1st July, 2012) Scope of Exempt Service - Notification no. 25/2012 dated 20.06.2012 From 1.7.2012 4. Services by an entity registered under section 12AA of the Income tax Act, 1961 (43 of 1961) by way of charitable activities. Meanings and Definitions: From 1.4.2012 to 31.3.2013 (K) charitable activities means activities relating to - ( i ) public health by way of - ( a ) care or counseling of ( i ) terminally ill persons or persons with severe physical or mental disability, ( ii ) persons afflicted with HIV or AIDS, or ( iii ) persons addicted to a dependence-forming substance such as narcotics drugs or alcohol; or ( b ) public awareness of preventive health, family planning or prevention of HIV infection ( ii ) advancement of religion or spirituality ( iii ) advancement of educational programmes or skill development relating to,- ( a ) abandoned, orphaned or homeless children ( b ) physically or mentally abused and traumatized persons ( c ) prisoners or ( d ) persons over the age of 65 years residing in a rural area ( iv ) preservation of environment including watershed, forests and wildlife ( v ) advancement of any other object of general public utility up to a value of (a) eighteen lakh and seventy five thousand rupees for the year 2012-13 subject to the condition that total value of such activities had not exceeded twenty five lakhs rupees during 2011-12 (b) twenty five lakh rupees in any other financial year subject to the condition that total value of such activities had not exceeded twenty five lakhs rupees during the preceding financial year From 1.4.2013 - Notification No. 3/2013-ST, dated 1-3-2013 . (K) charitable activities means activities relating to - ( i ) public health by way of - ( a ) care or counseling of ( i ) terminally ill persons or persons with severe physical or mental disability, ( ii ) persons afflicted with HIV or AIDS, or ( iii ) persons addicted to a dependence-forming substance such as narcotics drugs or alcohol; or ( b ) public awareness of preventive health, family planning or prevention of HIV infection ( ii ) advancement of religion or spirituality ( iii ) advancement of educational programmes or skill development relating to,- ( a ) abandoned, orphaned or homeless children ( b ) physically or mentally abused and traumatized persons ( c ) prisoners or ( d ) persons over the age of 65 years residing in a rural area ( iv ) preservation of environment including watershed, forests and wildlife . Amending Note: 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 upto ₹ 25 lakhs will not be available. However, the threshold exemption will continue to be available up to ₹ 10 lakhs. From 1.4.2012 rural area means the area comprised in a village as defined in land revenue records, excluding,- (i) 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 (See Notification no. 25/2012 dated 20.06.2012 , effective from 01.07.2012) Clarification by the Board ( Taxation Guide - Guidance Note - 7 - Exemptions dated 20.06.2012) 7.4.2 What is the tax liability of a registered charity on their activities? If a registered charity is doing any activity falling in negative list of services or is otherwise exempt, it is not required to pay service tax on that activity. In case, where its activity is covered explicitly in any of the specified charitable activities, it is exempt from service tax without any value limit.