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IMA and Service Tax

IMA and Service Tax

Suvir Sharma and Dr KK Aggarwal


IMA, if registered under 12 AA of Income Tax Act 1961 what does it mean in terms of Income Tax and in terms of Service Tax.

1. If any trust/ society is registered u/s 12AA of Income tax act it's income will be exempt from income tax provided the activities are covered U/s 2(15) which is as follows:

The expression “charitable purpose” has been defined under Section 2(15) of the Act to include:

(a)      relief of the poor,

(b)      education,

(c)      medical relief, and

(d)      Advancement of any other object of general public utility.

Under service tax as per notification no.25/2012 if any entity is registered u/s 12AA of income tax act then the services provided by it will be exempt from services tax.

 The detail of notification is as follows:

"charitable activities" means activities relating to -

(i) public health by way of -

    (a)  care or counselling of (i) terminally ill persons or persons with severe physical or mental disability, (ii) persons afflicted with HIV or AIDS, or (iii) persons addicted to a dependence-forming substance such as narcotics drugs or alcohol; or

    (b)  public awareness of preventive health, family planning or prevention of HIV infection;

(ii) advancement of religion or spirituality;

(iii) advancement of educational programmes or skill development relating to,-

    (a)     abandoned, orphaned or homeless children;

    (b)     physically or mentally abused and traumatized persons;

    (c)      prisoners; or

    (d)     persons over the age of 65 years residing in a rural area;

(iv) preservation of environment including watershed, forests and wildlife; or

(v) Advancement of any other object of general public utility.

  Do all State and Local Branches of IMA need to get registered with 12 AA separately

To get registered U/s 12A an entity should be separately registered as society and should have their own pan no. only then they can have their own registration U/s 12A.


If the branch is operating under main office then they can use centralized pan and 12A registration.


If the branch is not associated with central body and still using your pan then the tax liability of that branch will be that of the main central office.


The main office is responsible for any tax violation of the branches who are using your pan/ service tax no. and 12A registration.

Does IMA need to charge Service Tax for making a new member? IMA for making member charges Headquarters Fund Contribution.  Each membership fee is distributed to IMA State Branch, IMA Local Branch and Headquarter.

As per the notification no.25/2012 the society need not charge any service tax on membership fees if the activities of the societies are covered as charitable as per the notification detailed mentioned above.

 When IMA is organizing a Conference do they need to charge Service Tax on Delegation fee. What about members contributing towards the Conferences instead of paying Delegation Fee they contribute towards the Conference.

If this fees is charged as simple conference fees then you need to charge service tax. But if the fees is accepted as donation and receipt U/s 80G is issued then no need to charge service tax.

Does IMA need to charge Service Tax if they book stalls, take sponsorship of session etc.

For stall booking service tax should be charged

What are the Income Tax benefits to donate money to IMA as on today?

The donor will get deduction U/s 80G to the tune of 50% of the amount donated as per subject to 10% of total income.

In each activity of IMA does  IMA need to charge Service Tax

Refer notification no.25/2012 mentioned above.


What are the legal penal provisions for any Service Tax default

Penalty is 100% of tax evasion apart from amount of interest which is 

@ 18% up to 6 months of delay

@24% from 6 months to one year

@30% for rest.