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Circular no.175 /01 /2014 ; Levy of service tax - services provided by (RWA)

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Circular No.175 /01 /2014 – Service Tax - Levy of service tax on services provided by a Resident Welfare Association (RWA) to its own members

https://forum.chdcaprofessionals.com/Circular-No-175-01-2014-Service-Tax-Levy-of-service-tax-on-services-provided-by-a-Resident-Welfare-As-tp369.html

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Does this clarification not override notification no.25/2012 and hence not good in law? Circular provides for liability on the entire value of contribution if it exceeds Rs.5000/- per month though this is not what notification no.25/2012 provided for.

As per this cirular and also mentioned in https://blog.apnacomplex.com/2014/01/22/jan-2014-circular-on-service-tax-on-dues-collected-from-members-in-apartment-associations/ - there are two major clarifications in this circular -

1. Entire amount of contribtions from members who is paying more than Rs. 5,000/- per month is liable for service tax.

2. In societies where there are only few members who pay more than Rs. 5,000/- only their contribution comes under service tax and not the entire society.

An interesting question would be if society needs to collect this service tax from these members or can directly calculate the liability and then pay to the GoI from its funds.

#1. If member Contribution is less than Rs.5000/month Service Tax not applicable to member. <No Change from Story-as-of-now> 

#2  If member contribution is more than Rs.5000/month, there is no exemption and Service Tax is applicable on full amount. <Major Change>

#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.ere

Here's a link for the complete article - Service Tax for RWA / Society / Association Circular


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