Co op housing society income tax

Tax planning 1128 views 3 replies

MANISH PANCHAL

service

174 Points Posted on 04 November 2012

Dear Sir

We are Housing co_op Society I have below query relating to accounting & Income Tax of various transactions

1. We have collected amounts from members for Navratri Festival What is the treatment of the same. i.e Should it be credited to income and expenditure accounts(Contribution collected from members for Navratri) and Debited to Income & Expenditure accounts (Various Navratri Expenses out of Contribution Collected)

Should it be Credited or Debited to Navratri Fund and shown under other Reserve Fund in Balance Sheet.

2. Should we pay income tax on Balance Amount if we follow First Treatment i.e charged to Income & Expenditure accounts OR No to pay Income tax if we Create Navratri Fund shown in Balance Sheet

Pl. Give your guidance on above issues.

Replies (3)

ANUP GUPTA

KEEP SMILING fcaanupgupta@gmail.com

303 Points Posted on 04 November 2012

Dear Manish G,

in your case section 44A of income tax apply where surplus of receipt over the expenditure on mutual activities is not taxable.

As far as its accounting concerned it's better to treat receipts as Navratri fund in bal sheet and reduce this fund by the amount you have spended. Remaining bal. will be shown in bal sheet in liab side as Navratri fund or whatever name u like

Collection of funds from member is not a income in any way.

for more clarity u may refer sect 44A

vijay

Practice

47 Points Posted on 05 November 2012

dear manish,

Specified Objective based receipts / contributions are also be treated as a receipts of the trust during period only, but will maintain account for close monitering of its inflow / outflows

subhash

CHARTERED ACCOUNTANTS

23 Points Posted on 23 August 2015

The concept of mutuality applies and hence the excess of Income over expenditure is not taxable. However its advisable to show Income and expenditure of the year in income and expenditure account. The fund is created mainly for the activities which has impact for more than one year.