So far, you have been paying service tax at the rate of 12.36%. But not anymore, as the new Service Tax rate of 14% will be rolled out starting next month.
Subsequent to President assent to Finance Bill, Central Government has issued Notification no. 13/2015-ST to 17/2015-ST dated 19-May-2015 to increase Service tax rate from 12.36% to flat 14% from June 1, 2015.
So, for the Aam Janta, this makes several services like eating out, air travel, construction etc slightly more expensive. This will be reflected on all invoices from the said date.
How will it affect Housing Societies?
For Housing Societies which have monthly maintenance billing, it means that any invoice for taxable services raised post May 31, 2015 would bear service tax rate of 14%, as against 12.36%.
For Housing Societies which have Quarterly, Half yearly or Yearly maintenance billing, service tax on maintenance for period post June 1, 2015 would be governed by rule 4(b) of Point of Taxation Rules. Applicable service tax rate would depend on date of invoice and date of payment.
We advise you should consult your Chartered Accountant/Auditor before taking a final view.
How will it affect Housing Societies on ADDA?
For Housing Societies, which have monthly maintenance, there is no action required by managing committee for rate change. These changes would automatically be configured from back end by us and all the invoices from June 1, 2015 will bear service tax rate of 14%.
For Housing Societies, which have Quarterly, Half yearly or Yearly maintenance billing, there is no action required by managing committee for rate change on invoices raised post May 31, 2015. These changes would automatically be configured from back end by us and all the invoices from June 1, 2015 will bear service tax rate of 14%.
However, for service tax rate applicable on invoices already raised before May 31, 2015 for maintenance for period post June 1, 2015, we advise you to consult your Chartered Accountant/Auditor and pass appropriate accounting entries.
Update on Service Tax Check here