A bold decision by Modiji to ban old Rs 500 & Rs 1000 notes, may have you worried regarding impacts on housing society accounting and management. Here’s a few tips to help you through the change.
On 8th November, 2016, we saw a landmark decision being taken by Shri Narendra Modiji, which rendered all Rs. 1000 notes & and all Rs. 500 notes invalid. This has a significant impact on our economy and how financial transactions would be carried out going forward.
Housing societies who are already using Payment Gateways for collecting their maintenance bills from residents, does not have much to worry here.
As a Housing Society Management Committee member or an Apartment Resident, if you are trying to understand how this decision is going to impact you, then here are some suggestions/tips which will probably be of help to you.
- In case you are living in an Apartment Complex, which has Payment gateway enabled, then consider paying your maintenance bills through the gateway. You can save the cash for other transactions. Our Payment Gateway partners has assured us that they are working on increasing their server capacities so that more Apartment Residents can pay online
- As Management Committee members, cash you are having in hand, (if your maintenance collection is online, it should not be a large amount), its better to wait for a few days before you try to go a bank and deposit it. Initial few days would see a lot of rush in the banks. You can get the cash deposited in bank without any hassle till December 31st.
- Any cash payments which you have received till 9th November can be deposited in your bank till 31st December. Banks will also remain open this weekend so there is no need to panic.
- For making payments to staff or other vendors. You can try to withdraw cash from ATMs starting today. You can also withdraw cash from other banks ATMs without any extra charge. If possible, try to make part payment and make full payment after a few days. This will also make sure that your staff do not fall into difficulties without any cash in hand.
- For making cash exchanges, fill and carry the form below to the bank to save time and hassle. Maximum money you can take back is Rs 4000.
Its very clear through this step that our government is moving towards a cashless economy and building a more tax compliant society overall.
As a Management Committee members, overall changes to your Society Accounting which you should probably be thinking about bringing about are as follows:
- If you are collecting more than Rs. 5000 per apartment as maintenance charge per month or Rs. 60,000 yearly, then you are liable to pay service tax towards the same. Please discuss with your auditor in case you need to reassess your society accounting based on this fact
- Another common tax related mistake is not deducting TDS while paying vendors. Make sure you are keeping this in mind.
- Its apparent that Financial Audits this year would be more strict this year. For large apartment complexes, if you are still handling a large amount of cash, you might face extra tax related scrutiny (See our blog on how you can set up your society accounting for a smooth audit)
- Managing Income or Collections:
- Set up a payment gateway in your apartment complex so that you are able to collect maintenance dues, without having to handle cash. Average cost of processing a cheque is Rs. 75. Handling cheque returns is a much larger issue. A payment gateway gives you a lot of advantages over collecting maintenance through cash, cheque or NEFT transfers. Read More Here.
- Enforce collection of payments from vendors who maybe using your complex for setting up stalls, or other marketing activities, through online payment
- Managing Payments or Expenses:
- Try to make cheque or electronic payments for all society related payments. This way you will have to handle very little cash. The only cash which you should handle is petty cash for administration,
- For payments to your staff & workers, you should ask them to open bank accounts so that you can transfer money to them online. This will also help them manage their finances better and would be a lot of help to them in the long run.
If your Apartment Complex still doesn’t have an Online Payment Gateway so Residents can pay Maintenance bills by credit/debit card or Net Banking, please let ADDA help you there.
Modiji has overnight brought a huge change. Let us do it at least in the coming 20 days before your next Bill Payments start!!
Sign up by 20th November, 2016 and get Payment Gateway up and running for your Society, without any extra cost by 1st December, 2016 – In time for your next Maintenance Billing!
Do get in touch with your ADDA Customer Support Representative, Call 92233 11999 or fill up the form here, and we will get in touch with you right away.