All You Need To Know About Society Billing And Accounting

If you are the Treasurer of your Management Committee, you have by now realised housing society billing and accounting is no mean feat. In fact, society billing can get very tricky. Having worked with Management Committees closely for over a decade, ADDA has had the unique privilege of interacting with society treasurers to understand their pain points about society accounting, the difficulties they face when taking up this position.

This article lists down all the taxes that a housing society has to pay and the role of society billing and accounting software in easing the burden of Treasurers, who are usually voluntary office bearers holding private jobs that are often not related to Accounting.

Society Billing And Accounting

What Are The Taxes Communities Pay For Society Billing And Accounting?

Tax Deducted at Source (TDS)

Section 194C and 194J of Income Tax Act mentions two categories of TDS to be deducted :

  1. Contractor – Consolidated payment during the Financial Year. For individuals/HUF for a threshold limit of INR 100000, the tax percentage is 0.75% and 1.5% respectively, to be submitted by challan 281. Applicable from 14/05/2020 to 31/03/2021. 
  2. Professional Fees for a threshold limit of INR 30000, attracts a 7.5% TDS to be submitted by challan 281. Applicable from 14/05/2020 to 31/03/2021. 

Refer to the image for a complete schedule of TDS payment and filing of return from Deductors :

TDS Schedule for Society Billing And Accounting

Section 201A of the Income Tax Act lists the following actions as defaulting :

  1. Non deduction of tax at source, either in whole or in part – Penalty is 1% per month. 
  2. After deduction of tax, non payment of tax either in whole or in part – Penalty is 1.5% per month. However, the penalty interest comes down to 0.75% per month only if dates of remittance fall between March 20 – June 29.

The interest rate for both defaults are calculated monthly, not daily. Therefore interests are not calculated on the basis of Partial Months. 

Goods and Services Tax (GST)

An important aspect of society billing and accounting, GST invites a lot of questions regarding correct forms, correct dates of filing and payment. Here is a breakdown form by form :

GSTR 1 : For turnover more than INR 1.5 crore. 

Filing Period : Monthly (March to May) 

Return Due Dates : 30th June

GST Payment Due Date : 20th Day of Next Month

GSTR 1 : For turnover less than or equal to INR 1.5 crore. 

Filing Period : Quarterly

Return Due Dates : 30th June

GST Payment Due Date : 20th Day of Next Month

GSTR 3B : Annual Turnover of more than INR 5 Crore in Previous FY 

Filing Period : February to April

Return Due Dates : 24th June

GST Payment Due Date : 20th Day of Next Month

GSTR 3B : Annual Turnover of more than INR 1.5 Crore up to INR 5 Crore in Previous FY 

Filing Period : February to March

Return Due Dates : 29th June

GST Payment Due Date : 20th Day of Next Month

GSTR 3B : Annual Turnover of less than or equal to INR 1.5 Crore in Previous FY 

Filing Period : February

Return Due Dates : 30th June

GST Payment Due Date : 20th Day of Next Month

Professional Tax

Housing Societies in many ways function as a working space for accountants, security guards, facility managers, housekeepers. In case the individuals employed are on your payroll, you are required to submit professional taxes to the State Government. The society billing of these taxes should follow the rules of their respective states.

Professional Tax for Karnataka

Gross Monthly Salary of INR 15000 – Nil
Gross Monthly Salary of INR 15,001 and above – INR 200

The payment of this tax has to be made by the 20th of the subsequent month. Returns to be made by the 20th of next month. May 30 is the last date to file annual statements in Form-4A.

Professional Tax for Maharashtra

Gross Monthly Salary upto INR 7500 – Nil

Gross Monthly Salary of INR 7501 – INR 10000 – INR 175

Gross Monthly Salary of INR 10001 and above – INR 200 for 11 months & INR 300 for the 12th month.

Women are exempted to pay this tax up to the bracket of INR 10000.

Professional Tax for Tamil Nadu

Refer Table :

Professional Tax For Tamil Nadu

Income Tax

Every apartment community/housing society/gated communities are liable to pay income tax as part of its society billing and accounting, provided there is Non Member Income. Any income acquired through revenue channels that is not part of maintenance payment fall under this category. For instance, income through renting of banquet halls to third parties or income through renting of billboards within community. Read more about Principle of Mutuality here to get an idea about investing your income correctly.

Advance Tax & Society Renewal

As the name suggests, Advance Tax is the tax paid before the end of the financial year. Following is the schedule :

Advance Tax Schedule

An important part of your society billing will be your Society Registration and Society Renewal Charges. Click here for a detailed article on Society Registration and Renewal.

Role Of Society Billing Software

Two thirds of this article is all about the necessary taxes to pay to the government. That gives a fair idea of the mammoth task that society billing and accounting can be. This is where a society billing software come into play. 

Just paying the taxes on time is not enough. A complete audit is where the challenge lies. Click here to read up more on housing society financial audit and closing of books. 

Reminders for each of these tax filing can be set up in a society billing software. Output GST is automatically calculated and collected on maintenance charges. Not just that! You can even collect GST on applicable individual line items. This is especially helpful for housing societies in Maharashtra. Another interesting set up also helps you to manage maintenance collection received in advance from society members.

 The Invoice Tracker gives you a complete detailed report of all the Input GST paid. This helps to save taxes, since Input GST can be reclaimed once the payee has filed their GST reports. Society management software have the basic taxes already predefined in the software. This implies, you do not have to set up the tax heads manually. The same Invoce Tracker in Expense Trackers prompt the user for TDS details ensuring these taxes are correctly collected.  These TDS details can be set up once by a qualified accountant and the calculation will be made automatically on all invoices thereafter.

The General Ledger, compiled by auto entries, take into account all the taxes paid along with relevant document details. This includes Assets, Liabilities, Income and Expenses. A correct calculation and meticulous record of your book of accounts during auditing saves several thousands of rupees that will be spent as tax penalties. 

A completely separate tab of Taxes under Bank & Cash further allows the user to set up the Taxes charged by the State Government and keep a track of taxes paid. 

If you would like to know more about how a society billing software can take care of all your tax woes, feel free to reach us.

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About the Author: Karnika Roy

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