{"id":4212,"date":"2014-01-23T20:33:30","date_gmt":"2014-01-23T15:03:30","guid":{"rendered":"http:\/\/apartmentadda.com\/blog\/?p=4212"},"modified":"2023-11-02T03:47:43","modified_gmt":"2023-11-02T03:47:43","slug":"service-tax-for-rwa-society-association-circular-of-jan-2014-2","status":"publish","type":"post","link":"https:\/\/adda.io\/blog\/2014\/01\/service-tax-for-rwa-society-association-circular-of-jan-2014-2\/","title":{"rendered":"Service Tax for RWA \/ Society \/ Association Circular of Jan-2014"},"content":{"rendered":"

Dear ADDA Users,<\/span><\/h3>\n

There has been a latest Circular from the Ministry of Finance, that may require you to re-evaluate the method used by you to collect Service Tax from Members.<\/span>
\nWe know this is difficult for Non-Accountants, but we will keep it simple.<\/span><\/p>\n

STORY AS OF NOW<\/b><\/span><\/p>\n

In 2012, a Notification<\/a> was issued, which had the below wording:<\/span><\/p>\n

“..The Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the following taxable services from the whole of the service tax leviable thereon under section 66 B of the said Finance Act, namely<\/span><\/p>\n

Service by an unincorporated body or an entity registered as a society to own members by way of reimbursement of charges or share of contribution<\/span><\/p>\n

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\u201d<\/span><\/p><\/blockquote>\n

Based on the above wording the majority consensus among Auditors across India was:<\/span><\/p>\n

If a Member has a contribution* of Rs.6000\/month towards the Society, the Service Tax is applicable on Rs.1000 (Rs.6000 – Rs.5000)<\/span><\/span><\/strong><\/p>\n

*- Contribution in this post would mean contribution towards taxable services by the Society. E.g., That amount will not include Property tax, if the Society is collecting property tax on behalf of the Govt.<\/span><\/p>\n

LATEST DEVELOPMENT<\/b><\/span><\/p>\n

The new Circular of 10-Jan-2014<\/a>, presents itself as a clarification to the original notification. It says<\/span><\/p>\n

#1. I<\/span>f member Contribution is less than Rs.5000\/month Service Tax not applicable to member. <\/span><No Change from Story-as-of-now>\u00a0<\/span><\/em><\/p>\n

#2 \u00a0If member contribution is more than Rs.5000\/month, there is no exemption and Service Tax is applicable on full amount. <Major Change><\/b><\/span><\/p>\n

#3 Service Tax is applicable only to the specific Members whose Contribution is more than Rs.5000\/month. This goes to clarify the doubt that if in a Society 2 members have contribution exceeding Rs.5000, service tax need not be collected from all Members. <\/span><No Change from Story-as-of-now>\u00a0<\/span><\/p>\n

#4 Threshold of Taxable Service by the Society of 10Lakh \/ Financial year to be eligible to collect Service Tax.\u00a0<\/span><No Change from Story-as-of-now> <\/span><\/p>\n

#5 Non-Taxable service : Where service provider is acting as Pure agent those services comes under Non taxable services. E.g., if the Society is collecting Electricity Bill payment from Individual Flats and paying to the Govt without any added fee for it, the payment amount is not taxable.<\/span>
\nHowever, it clarifies that Electricity Bill in the name of the RWA is under the purview of Service Tax. <No Change from Story-as-of-now>\u00a0<\/span><\/p>\n

#6 RWA can avail the cenvat credit. <No Change from Story-as-of-now> <\/span><\/p>\n