Applicability to NGOs
 
NGOs are basically service –oriented organization and being part of the civil society, work for the poor and marginalized communities. Therefore NGOs enjoy tax exempt status under section 11 and 12 of the Income-tax Act as their work is for the poor and the underprivileged sections of our society.

Even though NGOs provide their services for a charitable cause, they may still charge some amount for their services with a view to recover their running costs or to finance their operations. Therefore the Service tax shall be leviable on any taxable service provided by NGOs. And NGOs will be liable to collect the service tax from the persons to whom they are rendering the services and also deposit it with the Government.

On the other hand NGOs also utilize the services of the service providers. The service provider raises invoices/bills in which the service provider charges service tax. In such case the Service provider to NGO will collect the service tax and deposit the same with the Government.

Some of the important provisions relating thereto have been discussed herewith.