Charity Services –Services by an entity registered under section 12AA of the Income tax Act, 1961 (43 of 1961) by way of charitable activities;

1.  I am a registered charity. How do I know that activities provided by me are charitable activities?

You are doing charitable activities if you are registered with income tax authorities for this purpose under section 12AA the Income-tax Act, 1961 and carry out one or more of the specified charitable activities. Following are the specified charitable activities:—

(a)  public health by way of —

(I)  care or counselling 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

(II)  public awareness of preventive health, family planning or prevention of HIV infection;

(b)  advancement of religion;

(c)  advancement of educational programmes or skill development relating to,-

 (I)  abandoned, orphaned or homeless children;

(II)  physically or mentally abused and traumatized persons;

(III)  prisoners; or

(IV)  persons over the age of 65 years residing in a rural area;

(d)  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 lakh rupees in a financial year subject to the condition that total value of such activities had not exceeded twenty five lakh rupees during the preceding financial year.

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 otherwise exempt, he is not required to pay service tax on that activity. In case, where his activity is covered explicitly in any of the specified charitable activities at ‘a’ to ‘d’ of the answer to 6.3.1 he is exempt from service tax without any value limit. For charitable activities mentioned at ‘e’ of the answer to 6.3.1 he is exempt up to a value of twenty five lakh rupees in a financial year if the total value of such services had not exceeded twenty five lakh 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 as ‘body of people at large sufficiently defined by some common quality of public or impersonal nature’.

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