It's not just the industry chambers but even clubs and associations which may soon have to pay service tax. The Central Board of Excise and Customs is likely to issue a clarification soon defining a "charitable institution" for exemption from service tax.

The issue before the board was that an exemption extended to a body under the Income Tax Act recognising it as a charitable organisation was not binding on the CBEC as a criteria for granting a similar exemption from service tax, an official said.

A view that was under the  consideration of the board was that a club or an association should be treated as a charitable organisation not in the context of the services that it provides to its own members but services that were provided to a third party -- for instance services by the Red Cross Society, officials said.

Several organisations including chambers like Ficci have in the past got recognition from the tax department as a charitable institution.

For instance, the income tax department had, in an order passed for the assessment year 2002-03 in case of Ficci, stating that it was eligible for exemption since the activity of the assessee was for promotion, protection and development of trade, commerce and industry in India.

The service tax department had recently sought details of services offered and the amount of subscription charged by the four industry chambers -- Ficci, CII, Assocham and PHDCCI, to ascertain their liability to pay service tax.

The letter had also sought a copy of the balance sheet for the period 2005-06, the structure of the organisations and the article of association. Services provided by a club or an association to its members have been brought under the levy of service tax from June 2005.

The tax department, in its communication, had pointed out that the "club or association" does not include any person or body of persons engaged in any activity which are in the nature of public service and are of a charitable, religious or political nature.