Live Course on Drafting of Appeal and Reply of Penalty Notice by CA Sachin Sinha. Register Now!!

Query ?? plz reply

@*CS Siddharth Bumb. * (B.Com, CA Final, CS ) (5270 Points)

01 August 2011

Situation :

There is a mess which is managed by students. Till now there was each and everything was illegal and now they want to make such illegal thing into legal so I consult them to form a co-operative society.... because they do not want to pay any tax, is it ok with co-operative society or there should be trust or company u/s 25 ? The net turnover is more than 3crore They first collect all money from students and such money is spend on them only i.e. there is no profit in short there is mutuality concept. My further question is whether service tax is applicable or VAT is applicable or none ??? If yes, is there any way to escape from these taxes ?? Employees are more than 60. Which other acts/taxes are applicable here ??

Please suggest me...

Thank You in advance...

Regards,

Siddharth Bumb.

Reply
Follow
Share

8 Replies

Mihir (Wealth Manager) (5293 Points)
Replied 01 August 2011

Forming a Trust is suitable, in my opinion. Service tax will be applicable.

Supriyo Dutta (Accountant & Auditor) (35 Points)
Replied 01 August 2011

what is the role and problems of disclosure?

Radha Sarda (-) (30 Points)
Replied 01 August 2011

For setting up a private trust do we need a trade license? what is the tax implications of a private discretionay trust?

@*CS Siddharth Bumb. * (B.Com, CA Final, CS ) (5270 Points)
Replied 01 August 2011

@ Radha Sarda : for forming a trust we have to register under charitable trust act....

@*CS Siddharth Bumb. * (B.Com, CA Final, CS ) (5270 Points)
Replied 01 August 2011

@ mihir : mihir can u please confirm ?

Please tell me its urgent...

@*CS Siddharth Bumb. * (B.Com, CA Final, CS ) (5270 Points)
Replied 01 August 2011

@ supriya dutta : I didnt get you???

pulkit jain (In Practice) (58 Points)
Replied 02 August 2011

In my opinion the business must be taken over by a legal authority. So mere forming of trust cannot convert illegal into legal.

Acts like bonus,gratuity,epf,esi will be applicable.

A trust can be formed but it will not get exemption under sec 11.

Service tax will apply.

company u/s 25 also cannot be formed .

Thus a co-operative or trust ... any of them can be formed to take over the business.

Mihir (Wealth Manager) (5293 Points)
Replied 02 August 2011

Before deciding the form of organisation, ascertain who will be responsible for the decision making process on the top level. Who is willing to put in enough time and energy to be accountable for such an endeavour? A trust deed will be required for submission to the charity commissioner stating all the activities, functions, assets, liabilities, responsibility as well as powers of the trustees. You will be have to hold many meetings for discussing these issues and only then you can proceed further. If this activity is run by the student for the student, make sure the students who are in charge are serious enough to continue this work because there could be better opportunities for these students than running a trust. You know what I mean.