Swachh Bharat Cess on Service Tax in Apartment Complexes

by Krishanu

Dear ADDA Treasurers,

You may have heard of the Swach Bharat Cess being added to Service Tax.

A circular was published by Revenue department on 6-Nov-2015, based on which below is the majority interpretation. Clarifications are still pending from the department and our Team is on top of all information in this regard.

Please find below our understanding on how the change impacts Apartment Owners Associations/Resident Welfare Associations in Housing Societies or Apartment Complexes, as of now:

1. Service Tax rates are being revised to 14.5% effective 15 November, 2015. This is with regard to an increase of tax by 0.5% as Swachh Bharat Cess.

2. Currently, it seems that you may not be able to claim service tax credit for Swachh Bharat Cess. Hence, societies may end up paying 14.5% service tax on output services and take service tax credit of 14% only on vendor invoices. The clarification from service tax department is awaited in this regard.

If you are thinking about what you need to do to be prepared for this change; you need to do nothing at all if your Billing is on ADDA. ADDA billing and accounting package is already prepared for this change. We have created a System account called Swachh Bharat Cess in all the ADDAs. From Nov 15,2015 – along with Service Tax, Swachh Bharat Cess on Service Tax will be automatically posted. There is no action required on part of our users. For any further queries and help, please contact us here.

Your Sincerely,
ADDA Accounting Automation Department

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