If you are performing your Society Billing on ADDA, below are the suggested changes for the Service Tax reforms of Budget 2012.
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If your Society already collects Service Tax from Members
Analyze the Billing for 01-July-2012. For each Flat, calculate the total of the Monthly or Quarterly Recurring Invoice. Subtract the amount paid to local authorities (taxes). Bring the amount to a per month basis. Let’s call this amount Rs.X
If Rs.X does not exceed Rs.5000/month for any member, no Service Tax to be collected in the July Bill onward. You can un-select all Income Heads that you had previously selected for calculating Service Tax. How To: Admin Dashboard > Income Tracker > Setup > Auto Invoicing. Click “Revise Rule” next to the relevant Income Head and provide 0.00 for “Service Tax Rate” field. Click “Preview” button and ensure the Invoice looks alright. That’s all.
Now find the Members owning more than 1 Flat. Add the Rs.X from each of his flats. If the total exceeds Rs.5000/month, ST will be applicable for this particular Member only, for the amount by which his total collection exceeds Rs.5000/month.[Updated on 16-June-2012]
If Rs.X exceeds Rs.5000/month for any Flat, service tax is to be collected only from that Flat. [Updated on 16-June-2012]
Example: Let’s assume a Member owns 3 flats. The collection for each flat is Rs.3000. Total the Member pays is Rs.9000. Service Tax will be applicable on Rs.9000 for this Member. If this is the case for your ADDA, please email firstname.lastname@example.org , with subject “SCENARIO 2 positive”. We will direct you with the setting.
If Rs.X exceeds Rs.5000/month for all Flats, you may not have to make any changes.
However, you may still need to analyze if all relevant Income Heads have been selected for Service Tax collection. For example, if you had excluded Corpus Fund, Sinking Fund, Utility charges etc. from Service Tax calculation, you need to now select them.
How To: Admin Dashboard > Income Tracker > Setup > Auto Invoicing. Click “Revise Rule” next to the relevant Income Head and provide 12.36 for “Service Tax Rate” field. Click “Preview” button and ensure the Invoice looks alright. That’s all.
If your Society does not collect Service Tax from Members
Please consult with your Auditor. Please find the Taxable Income of your Society from this link: Is your Society Taxable? [Updated on 16-June-2012] If the Taxable Income is more than Rs.10L/year, you may need to perform the Service Tax registration for your Society. Chances are that the collection per Flat/Month does not exceed Rs.5000 in your case. But, if you have multiple flats owned by one person, you will have to collect and pay Service Tax for that Member. But if one Owner is having many flats, the total exemption for your Society is less, and may end up having greater Taxable Income. [Updated on 16-June-2012] Please consult with your Auditor and follow his interpretation, as appropriate. If you are an Admin User of a Premium ADDA (have premium Subscription Agreement with ADDA), please join the conversation here: ADDA Admin Users
Disclaimer: The above article compiles our learning from a good number of Apartment Complexes in India. Please note that regarding Service Tax, there are various interpretations by various Auditors. It is best to follow the interpretation of your Auditor who is responsibile of your Financial Statements & Reporting.
Updates made in October-2013.