Yoga-promoting institutions out of service tax net

Yoga instructor Ramdev's trusts and similar other institutions engaged in promoting yoga are not required to pay the service tax for a period, starting from June 20, 2012 to October 20, 2015, provided they are registered as charitable entities.

For period after October 20, 2015, Yoga-promoting institutions has come under the negative list which are exempt from the service tax. There was confusion whether service tax is applicable to yoga-promoting institutions or not before October 21, 2015. This was so because negative list of services issued witheffect from June 20, 2012 did not specifically mentions Yoga.

However, the exemptions will be given to the institutions for their registration as a charitable trusts under section 12AA of the Income Tax Act. As such, the exemption would be granted to only those institutions registered under the said section.

One may confuse as to how service tax exemption could be granted under Income Tax Act. This is because the negative list released bythe Central Board of Excise and Customs (CBEC) has an entry which says, services by an entity registered under the said section for charitableactivities would be exempt from the service tax.

The clarification was issued yesterday through anotification by CBEC on Monday, which reads as -- the Central Government herebydirects that the service tax payable ... on the service by way of advancementof Yoga provided by entities registered under section 12AA of Income-tax Act,1961 in the said period shall not be required to be paid. M S Mani, senior director, indirect tax, Deloitte Haskins& Sells LLP, said the clarification was necessary, or else service taxnotices would have gone to these entities. On October 21, 2015, CBEC had come out with anothernotification, specifically mentioning Yoga in the negative list of services. Earlier, Ramdev's trusts were issued service tax notices,but those pertained to period prior to 2012.