{"id":2788,"date":"2012-06-14T13:00:50","date_gmt":"2012-06-14T07:30:50","guid":{"rendered":"http:\/\/apartmentadda.com\/blog\/?p=2788"},"modified":"2023-11-02T03:44:25","modified_gmt":"2023-11-02T03:44:25","slug":"service-tax-housing-society-apartment-complex-owners-association-budget-2012","status":"publish","type":"post","link":"https:\/\/adda.io\/blog\/2012\/06\/service-tax-housing-society-apartment-complex-owners-association-budget-2012\/","title":{"rendered":"Service Tax for Housing Societies and Apartment Complexes &#8211; impact of Budget 2012"},"content":{"rendered":"<p>There have been Drastic Changes in the Service Tax law as applicable to Apartment Owners Associations or Cooperative Housing Societies, as presented in Budget 2012. <span style=\"color: #0000ff;\"><strong>These changes are applicable from <\/strong><strong>01-July-2012.<\/strong><\/span> We compile below all the changes.\u00a0 A circular with clear details from the Service Tax Department is still awaited. Below have been compiled with inputs from two leading Society Accounting Firms &#8211; Firm led by CA G. Pandit in Bangalore and a Firm led by M. Yennagudde in Mumbai. <span style=\"text-decoration: underline;\">Please note, these are interpretations of the actual Budget Proposal. Please do consult your Auditor before making relevant changes to your accounting process.<\/span><\/p>\n<blockquote>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_81 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69d669010b23e\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69d669010b23e\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/adda.io\/blog\/2012\/06\/service-tax-housing-society-apartment-complex-owners-association-budget-2012\/#Summary_for_those_in_a_hurry\" >Summary, for those in a hurry:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/adda.io\/blog\/2012\/06\/service-tax-housing-society-apartment-complex-owners-association-budget-2012\/#As_a_Treasurer_what_do_I_need_to_know_about_Service_Tax\" >As a Treasurer, what do I need to know about Service Tax<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/adda.io\/blog\/2012\/06\/service-tax-housing-society-apartment-complex-owners-association-budget-2012\/#Which_Societies_are_Taxable\" >Which Societies are Taxable<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/adda.io\/blog\/2012\/06\/service-tax-housing-society-apartment-complex-owners-association-budget-2012\/#Before_01-July-2012\" >Before 01-July-2012:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/adda.io\/blog\/2012\/06\/service-tax-housing-society-apartment-complex-owners-association-budget-2012\/#From_01-July-2012\" >From 01-July-2012:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/adda.io\/blog\/2012\/06\/service-tax-housing-society-apartment-complex-owners-association-budget-2012\/#Which_Income_Heads_are_Taxable\" >Which Income Heads are Taxable<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/adda.io\/blog\/2012\/06\/service-tax-housing-society-apartment-complex-owners-association-budget-2012\/#Before_01-July-2012-2\" >Before 01-July-2012<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/adda.io\/blog\/2012\/06\/service-tax-housing-society-apartment-complex-owners-association-budget-2012\/#From_01-July-2012-2\" >From 01-July-2012<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/adda.io\/blog\/2012\/06\/service-tax-housing-society-apartment-complex-owners-association-budget-2012\/#Which_Income_Heads_are_Exempt\" >Which Income Heads are Exempt<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/adda.io\/blog\/2012\/06\/service-tax-housing-society-apartment-complex-owners-association-budget-2012\/#Before_01-July-2012-3\" >Before 01-July-2012<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/adda.io\/blog\/2012\/06\/service-tax-housing-society-apartment-complex-owners-association-budget-2012\/#From_01-July-2012-3\" >From 01-July-2012<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/adda.io\/blog\/2012\/06\/service-tax-housing-society-apartment-complex-owners-association-budget-2012\/#If_One_Members_collection_exceeds_Rs5000month_collect_from_All\" >If One Member&#8217;s collection exceeds Rs.5000\/month, collect from All?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/adda.io\/blog\/2012\/06\/service-tax-housing-society-apartment-complex-owners-association-budget-2012\/#Before_01-July-2012-4\" >Before 01-July-2012<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/adda.io\/blog\/2012\/06\/service-tax-housing-society-apartment-complex-owners-association-budget-2012\/#After_01-July-2012\" >After 01-July-2012<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/adda.io\/blog\/2012\/06\/service-tax-housing-society-apartment-complex-owners-association-budget-2012\/#We_have_Commercial_Units_also_in_our_Society_eg_Shops\" >We have Commercial Units also in our Society (e.g., Shops)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/adda.io\/blog\/2012\/06\/service-tax-housing-society-apartment-complex-owners-association-budget-2012\/#Before_01-July-2012-5\" >Before 01-July-2012<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/adda.io\/blog\/2012\/06\/service-tax-housing-society-apartment-complex-owners-association-budget-2012\/#From_01-July-2012-4\" >From 01-July-2012<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-18\" href=\"https:\/\/adda.io\/blog\/2012\/06\/service-tax-housing-society-apartment-complex-owners-association-budget-2012\/#What_changes_do_I_make_in_my_ADDA\" >What changes do I make in my ADDA?<\/a><\/li><\/ul><\/nav><\/div>\n<h3><span class=\"ez-toc-section\" id=\"Summary_for_those_in_a_hurry\"><\/span><span style=\"color: #000000;\">Summary, for those in a hurry:<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"text-decoration: line-through;\"><span style=\"color: #000000;\">1. Almost every Society will be eligible for Service Tax Registration (Income above Rs.10Lakh\/year)<\/span><\/span><span style=\"color: #000000;\"> [Update on 16-June-2012]<\/span> <span style=\"color: #000000;\">1. Every Society needs to re-calculate whether it is under Service Tax purview or not.<\/span><span style=\"color: #000000;\"> [Update on 16-June-2012]<\/span> <span style=\"color: #000000;\">2. Exemption of Rs.5000\/month\/<strong>member<\/strong>. An owner of Multiple Flats will almost always exceed this.<\/span> <span style=\"color: #000000;\">3. Almost all Income Heads will come under Service Tax purview, including Funds, Utility charges etc.<\/span><\/p><\/blockquote>\n<p><strong>Service as defined in this Budget:<\/strong> \u201c Service by an unincorporated body or an entity registered as a society to own members by way of <strong>reimbursement of charges<\/strong> or <strong>share of contribution<\/strong>:\u2013 (a) &#8230;&#8230;&#8230;&#8230;&#8230;.; (b) for the provision of exempt services by the entity to third persons; or (c) up to an amount of five thousand rupees per month per member for sourcing of goods or services from a third person for the common use of its members in a housing society or a residential complex; \u201c<\/p>\n<h3><span class=\"ez-toc-section\" id=\"As_a_Treasurer_what_do_I_need_to_know_about_Service_Tax\"><\/span><strong><span style=\"color: #008000;\">As a Treasurer, what do I need to know about Service Tax<\/span><\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>This is a Tax that you collect from each Member (Owner of the Flat or Villa), along with the Bill (e.g., Monthly Maintenance Bill). The Tax is paid to the Government on a monthly basis, and returns are filed in a quarterly or half-yearly basis. The rate for the tax is 12.36%.\u00a0 E.g., if you charge Rs.6000\/month maintenance for a flat, the total amount to be collected from the Member is [Rs.6000 + 12.36% of Rs.6000]<\/p>\n<h3><\/h3>\n<h3><span class=\"ez-toc-section\" id=\"Which_Societies_are_Taxable\"><\/span><span style=\"color: #008000;\"><strong>Which Societies are Taxable<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<h3><span class=\"ez-toc-section\" id=\"Before_01-July-2012\"><\/span>Before 01-July-2012:<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Only Societies that collect more than Rs.3000\/month for any flat.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"From_01-July-2012\"><\/span>From 01-July-2012:<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>&#8220;All AoAs registered as society &#8230;. providing services to its members in terms of maintenance of common areas, running and operating of common utility services &#8230;&#8230;to its members&#8230;&#8230;.by sourcing of goods and services from third persons&#8230;&#8230;. &#8221; <strong><span style=\"color: #0000ff;\">Interpretation 1<\/span><\/strong> All Apartment Owners Association \/ Housing Societies to come under Service tax rules &#8230;.having total collection revenue in excess of Rs 10.00 lacs in a year. <strong><span style=\"color: #0000ff;\">Interpretation 2<\/span><\/strong> All Apartment Owners Associations\/ Housing Societies where the taxable Income [ i.e total receipts less <em>exempted amounts<\/em> ] during last year exceed Rs 10 lacs are required to be registered under Service Tax and pay the same. [Update on 16-June-2012] <strong>Find out how to <a href=\"https:\/\/adda.io\/blog\/2012\/06\/16\/society-service-tax-eligibility\/\" target=\"_blank\" rel=\"noopener noreferrer\">calculate the Taxable Income of your Society<\/a> <\/strong> <span style=\"text-decoration: line-through;\"><span style=\"color: #888888;\">Per ADDA&#8217;s knowledge a typical Apartment\/Villa Complex with more than 50 flats, located in the Tier I &amp; Tier II cities will have taxable receipts\u00a0 greater than Rs.10 Lakh.\u00a0 All such Societies will need to have Service Tax Registration.<\/span><\/span> [Update on 16-June-2012]<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Which_Income_Heads_are_Taxable\"><\/span><span style=\"color: #008000;\"><strong>Which Income Heads are Taxable<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<h3><span class=\"ez-toc-section\" id=\"Before_01-July-2012-2\"><\/span>Before 01-July-2012<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Uncertain. Each Society followed guidelines from its respective Auditor, that ranged from highly conservative (including ALL income heads under ST purview) to highly liberal (including only Housekeeping under ST purview).<\/p>\n<h3><span class=\"ez-toc-section\" id=\"From_01-July-2012-2\"><\/span>From 01-July-2012<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>&#8220;Levy charged to its members &#8230;..by way of reimbursement of charges or share of contribution&#8230;&#8230;.&#8221; <strong><span style=\"color: #0000ff;\">Interpretation 1<\/span><\/strong> Reimbursement charge means charge levied on the members to recover the cost incurred in providing maintenance services &#8230;..by procurement of goods and services obtained from third party. (incl utility services such as water and electricity) Share of contribution means indirect charge recovered &#8230;.thru contribution to spl reserves funds , such as sinking funds and the like. Withdrawal from spl capital reserve funds, FD interest taken to corpus reserve funds also would amount to share of contribution <strong><span style=\"color: #0000ff;\">Interpretation 2<\/span><\/strong> All reimbursement of expenses, \u00a0[ covering mun. tax, electricity, water charges, administrative expense, repair &amp; maintenace exp, all AMCs, etc. and All contributions, [ covering Sinking Fund, Repair Fund, Share Transfer Premium, Vehicle parking charges, non occupancy charges , etc.<\/p>\n<h3><\/h3>\n<h3><span class=\"ez-toc-section\" id=\"Which_Income_Heads_are_Exempt\"><\/span><strong><span style=\"color: #008000;\">Which Income Heads are Exempt<\/span><\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<h3><span class=\"ez-toc-section\" id=\"Before_01-July-2012-3\"><\/span>Before 01-July-2012<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Uncertain.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"From_01-July-2012-3\"><\/span>From 01-July-2012<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>&#8220;Exemption is in respect of \u201creimbursement charge or share of contribution\u201d up to an amount of Rs 5000\/- pm per member for &#8230;&#8230;&#8230;.&#8221; <strong><span style=\"color: #0000ff;\">Interpretation 1<\/span><\/strong> Aggregate the following charges 1) Charge levied in terms of monthly maintenance charge on the member or any recovery made from him in any form 2) Share of contribution to sinking or any other special fund 3) Withdrawal of any amount from past fund and applying current FD interest to corpus funds. Where the above aggregate exceeds Rs.5000\/month\/member, Service Tax to be collected on the receipt from that particular Member. <strong><span style=\"color: #0000ff;\">Interpretation 2<\/span><\/strong> The exemptions are a. \u00a0 All payments made to local authorities &#8230; Municipal Tax. \u00a0[ Paid to Municipal corporation \u00a0] &#8230; Water Charges [ paid to Municipal Corporation. ] b. \u00a0&#8230; All payments made to Government [ Central and State ] &#8230; N A Tax.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"If_One_Members_collection_exceeds_Rs5000month_collect_from_All\"><\/span><strong><span style=\"color: #008000;\">If One Member&#8217;s collection exceeds Rs.5000\/month, collect from All?<\/span><\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<h3><span class=\"ez-toc-section\" id=\"Before_01-July-2012-4\"><\/span>Before 01-July-2012<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Yes, as interpreted by majority Auditors.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"After_01-July-2012\"><\/span>After 01-July-2012<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>No. Service Tax to be collected only from the particular Members for who the receipt exceeds Rs.5000\/month.\u00a0 This is an unanimous interpretation.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"We_have_Commercial_Units_also_in_our_Society_eg_Shops\"><\/span><strong><span style=\"color: #008000;\">We have Commercial Units also in our Society (e.g., Shops)<\/span><\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>&#8220;We have yearly collection more than Rs. 10Lakh. Collection per member per month is less than Rs.5000. But we have Commercial Units (shops) in our Society. Do we need to collect Service Tax?&#8221;<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Before_01-July-2012-5\"><\/span>Before 01-July-2012<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Service Tax was not levied in most cases.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"From_01-July-2012-4\"><\/span>From 01-July-2012<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Service Tax applicable to the Commercial Units, no exemption applicable. The Exemption is applicable for Residential Units only.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"What_changes_do_I_make_in_my_ADDA\"><\/span><strong><span style=\"color: #008000;\">What changes do I make in my ADDA?<\/span><\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Check this in the following Blog Post: <a href=\"https:\/\/adda.io\/blog\/2012\/06\/14\/service-tax-in-housing-society-bills\/\" target=\"_blank\" rel=\"noopener noreferrer\">Applying July-2012 Service Tax changes in your ADDA<\/a> If you are an Admin User of a Premium ADDA (have premium Subscription Agreement with ADDA), please join the conversation here: <a href=\"http:\/\/www.linkedin.com\/groups\/ADDA-Admin-Users-4370555?home=&amp;gid=4370555&amp;trk=anet_ug_hm\" target=\"_blank\" rel=\"noopener noreferrer\"><strong>ADDA Admin Users<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>There have been Drastic Changes in the Service Tax law as applicable to Apartment Owners Associations or Cooperative Housing Societies, as presented in Budget 2012. These changes are applicable from&hellip;<\/p>\n","protected":false},"author":8,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","footnotes":""},"categories":[2024,2019],"tags":[256],"class_list":["post-2788","post","type-post","status-publish","format-standard","hentry","category-adda-community-accounting","category-adda-india-housing-society-apartment-management","tag-service-tax"],"_links":{"self":[{"href":"https:\/\/adda.io\/blog\/wp-json\/wp\/v2\/posts\/2788","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/adda.io\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/adda.io\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/adda.io\/blog\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/adda.io\/blog\/wp-json\/wp\/v2\/comments?post=2788"}],"version-history":[{"count":1,"href":"https:\/\/adda.io\/blog\/wp-json\/wp\/v2\/posts\/2788\/revisions"}],"predecessor-version":[{"id":11451,"href":"https:\/\/adda.io\/blog\/wp-json\/wp\/v2\/posts\/2788\/revisions\/11451"}],"wp:attachment":[{"href":"https:\/\/adda.io\/blog\/wp-json\/wp\/v2\/media?parent=2788"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/adda.io\/blog\/wp-json\/wp\/v2\/categories?post=2788"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/adda.io\/blog\/wp-json\/wp\/v2\/tags?post=2788"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}