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Serive tax applicable or not ???

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@CS Siddharth Bumb.

B.Com CA Final CS

3805 Points Posted on 30 July 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.

Replies (1)

Guest

Posted on 30 July 2011

i think u decided right As income from any service provided by Co-operative to its members is allowable as deduction U/S-80 P in INCOME TAX ACT.again there is no applicability of VAT here As there is no sale/trading of Goods .

even no Excise to be applicable.

but main part is SERVICE TAX itself will not fall in this case As u r not getting any receipt from others except from members .As it is very clear under Service tax rules unless there is a receipt .No question of paying service tax at all.

But my suggestion is if u r also providing any such service to outsiders also then u r very much liable 2 Service tax if it crosses once 10 laks limit under service tax basic exemption limit ..........

u r not allowed to form a trust 7 sec-25 Co. if the main object of ur trust & sec-25 co. is only providing service to members

any other views r welcomed..