Taxability of rwa

This query is : Resolved

ANKUSH GARG (Querist)
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21 August 2018 Respected Sir/Mam

One Resident Welfare Association which is registered as society but having PAN as "Trust" receive membership fees from its residents and used the same for the development and maintenance of the society. The said society/Trust is not Registered u/s 12A/12AA/80G.
In the F.Y. 2017-18, It had surplus of Rs. 300,000/- which it will use the same in future years.
My Query is:- 1. Whether the above said surplus will be taxable to keep in view principal of mutuality?
2. Which ITR it fill for A.Y. 2018-19?
3. How it shows its Income-Expenditure a/c in that form if the same is not taxable?

Please give reply with help of relevant section/portion of Income Tax return forms.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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21 August 2018 1 Associations such as apartment owners’ association or any mutual association run on subscriptions obtained from members for maintenance, mutual help, and recreations, whether periodically made or received as entrance fee or as ad hoc contributions from time to time are all exempt on mutuality basis in the view that no one can make income out of himself. The principle of mutuality derives from the concept that income earned by a person from external sources is taxable. Thus income derived from oneself cannot be treated as income thus cannot be taxed.
2 File ITR 5.
3 No taxable income no need to file ITR.

ANKUSH GARG

ANKUSH GARG (Querist)
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21 August 2018 Thanks for the reply sir.
But there is one more issue, when we file ITR-5, then it ask for status in response to which we select: AOP/BOI
Then it ask again for Sub-status in response of which we select Other trust/institution and then it charges the surplus @MMR. How to tackle this situation? Please Help.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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21 August 2018 Only show in ITR receipt from outside (other than member) like bank interest and rental receipt in ITR.

ANKUSH GARG

ANKUSH GARG (Querist)
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21 August 2018 And where to show Expense then

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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21 August 2018 No expenses show only interest earned as income and pay tax. Member monthly payment and expenses need not be shown in ITR.

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