Under the Finance Act 1994 , every service is taxable unless it is in Negative list . Further there are certain services on which the service tax has been exempted vide notification no 25/1012 which has been amended time to time . The service provided by the BPO is not covered under the Negative list . Further testing this services in the entry no -4 of the mega exemption , the exemption has been given to the services provided by entities registered under section 12AA of the Income Tax act by way of charitable activities . In this case the services are being provided by the BPO and not the NGO and further it is not clear whether the NGO is registered under section 12AA. In view of the above , the BPO services should be taxable .