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Service Tax on Yoga

​​The Government vide its Notification No. 42/2016-Service Tax dated 26th September 2016 has directed that the service tax payable u/s 66B of the Finance Act, 1994 on the service by way of advancement of Yoga provided by Charitable Entities (i.e. those registered u/s 12AA of the Income Tax Act, 1961) need not pay the taxes, for the services provided from 1st July 2012 till 20th October 2015.

​​A brief note on the background will be of relevance in this regard. As from 1st July 2012, when the Mega Exemption Notification (Notification No. 25/2012-Service Tax dated 20th June 2012) was issued, entry 5 provided exemption to "Services by an entity registered under section 12AA of the Income tax Act, 1961 (43 of 1961) by way of charitable activities;".

The definition segment of the Mega Exemption Notification defined "Charitable Activities" as under -

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

(ii) advancement of religion or spirituality

The said definition was amended w.e.f. 21st October 2015 vide Notification No.20/2015-Service Tax dated 21st October 2015 to include "Yoga", and consequently, the definition reads as follows -

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

(ii) advancement of religion, spirituality or yoga

Hence, during the intervening period i.e. as from 1st July 2012 till 20th October 2015, the services by way of advancement of yoga was not covered by any exemptions, and was subjected to levy of Service Tax. Many assessees did not pay any service tax on the activities, on the belief that it was not subjected to service tax. This position has now been clarified by the Government beneficially for all the Charitable Entities engaged in advancement of Yoga.

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