Renting of Immoveable Property by Religious Trust

[Aliasgar Tambawala]

To the best of my knowledge, Service tax has been made applicable on all services unless they are covered in the Negative list or they are specifically exempt under notification  no. 25/2012-ST dated 20.06.12.

 Clause 4 of Exemption Notification  no. 25/2012-ST dated 20.06.12. reads as under:

“4.      Services by an entity registered under section 12AA of the Income tax Act, 1961 (43 of 1961) by way of charitable activities;”

and for the purpose of Notification  no. 25/2012-ST dated 20.06.12, “Charitable activities” has been defined to include:

“(k) “charitable activities” means activities relating to -

     (ii) advancement of religion or spirituality;”

In this regards I would like to know whether the services provided by an entity registered under section 12AA of the Income tax Act, 1961 (43 of 1961) shall be by way of charitable activities or whether the proceeds of the services provided shall be used for charitable activities?

For instance, can the above-mentioned Exemption Notification be interpreted to cover Renting of commercial property by an entity registered under section 12AA of the Income tax Act, 1961 (43 of 1961) under leave and license agreement to a licensee being a business entity (being services provided by an entity registered under section 12AA of the Income tax Act, 1961 (43 of 1961) and the licensee fees thereof being utilized for advancement of religion or spirituality?

AI Summary

Is Renting Out Commercial Property by Religious Trusts Under Section 12AA Subject to Service Tax? A discussion on a forum addresses whether renting out commercial property by a religious trust registered under section 12AA of the Income Tax Act is subject to service tax. The inquiry focuses on whether such activities fall under the 'charitable activities' exemption in Notification No. 25/2012-ST. A participant clarifies that renting to a business entity is taxable, regardless of the use of proceeds for charitable purposes. The term 'advancement of religion or spirituality' is not defined in the Finance Act, requiring reliance on dictionary definitions and related tax clarifications, which exclude activities resembling trade or commerce from exemptions.