06 August 2010
Till the Finance Act 2005, most of the NGOs, not being ‘commercial concerns’ were exempt from charging service tax. The Finance Act 2006 has substituted references in the Finance Act, 1994 to the expression ‘commercial concern’in relation to 17 taxable services, with the term ‘person’ or ‘any person’. The implication of this is quite wide and now even a nonprofit making entity, say a charitable trust or a company registered under section 25 of the Companies Act, is liable to pay tax and is eligible to take credit of such tax paid on its input services. Thus, if any of the activities of an NGO falls under any of the services covered in clause 105 of section 65 of Finance Act 1994, care should be taken to ascertain service tax implications.
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