Hello everybody,
My apartment association is collecting monthly maintainance of Rs 5500 per month (total 500 apartments ) and there is some confusion regarding the service tax to be paid on it.
Association was advices by one of our resident that -
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"Recently the department has issued a clarification vide Circular No-175/01/2014 dated 10.01.2014, which clearly clarifies that any amount collected from a member in excess of Rs. 5,000/-, the said excess amount over Rs. 5,000/- is taxable.
For Example :- X society has 20 members and 15 of them pay Rs. 5,000/- per month and 5 members pay Rs. 7,500/-. The amount received from 5 members is in excess of Rs. 5,000/-. Under this clause the exemption will be available only upto Rs. 5,000/-. The tax will be payable on amount in excess of Rs. 5,000/- ie, Rs. 2,500/- per month per member in respect of such 5 members.
check teh below para from teh govt notification-
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Sl. No. |
Doubt |
Clarification |
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1. |
(i) In a residential complex, monthly contribution collected from members is used by the RWA for the purpose of making payments to the third parties, in respect of commonly used services or goods [Example: for providing security service for the residential complex, maintenance or upkeep of common area and common facilities like lift, water sump, health and fitness centre, swimming pool, payment of electricity Bill for the common area and lift, etc.]. Is service tax leviable?
(ii) If the contribution of a member/s of a RWA exceeds five thousand rupees per month, how should the service tax liability be calculated? |
Exemption at Sl. No. 28 (c) in notification No. 25/2012-ST is provided specifically with reference to service provided by an unincorporated body or a non–profit entity registered under any law for the time being in force such as RWAs, to its own members.
However, a monetary ceiling has been prescribed for this exemption, calculated in the form of five thousand rupees per month per member contribution to the RWA, for sourcing of goods or services from third person for the common use of its members.
If per month per member contribution of any or some members of a RWA exceeds five thousand rupees, the entire contribution of such members whose per month contribution exceeds five thousand rupees would be ineligible for the exemption under the said notification. Service tax would then be leviable on the aggregate amount of monthly contribution of such members.
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As state above the service tax will be leviable on the maintenance charges collected from members in excess of Rs. 5,000/- and on the aggregate amount collected from all the members, whose contribution exceeds the said amount. In case the aggregate amounts collected from members in excess of Rs. 5,000/- will listed and the said amount may not exceeds an amount of Rs. Rs. 10,00,000/- for the first Quarter. As taxable services upto Rs. 10 lacs is exempt under Notification 33/2012 ST dated 20.06.2012. The said notification provides an exemption from tax leviable on taxable services of aggregate value not exceeding the limit of Rs. 10 lacks. The definition of ‘aggregate value’ excludes amounts raised towards wholly exempt services. Hence, payment of Service for the First Quarter does not arise.
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The above sugestion is still under debate within our association . COuld somebody put more clariry on teh issue?
Thanks,
Satya S
CAclubindia
