Tax for Resident Welfare Association

Q: DEAR SIR
query reg service TAX FOR RWA
I am the treasurer of the ADENA OWNERS ASSOCIATION.
WE ARE COLLECTING MONTHLY Maintenance .Charges from Resident Members everymonth to defray the expenses incurred to SECURITY,EB CHARGES,SUMP /WATER CHARGES/COMMON AREA SERVICES etc.
we have entered in to CONTRACT WITH AKSHAYA HOMES&PAYING MONTHLY LUMPSUM CHARGES.
AS PER SERVICE TAX NOTIFICATION RWA HAS TO PAY SERVICE TAX IF IT EXCEEDS Rs 5000 pm.
as we have entered in to A CONTRACT FOR lumpsum with the AKSHAYA,PLEASE ADVICE WHO IS RESPONSIBLE /LIABLE FOR SERVICE TAX.
YOUR OPINION IS VERYMUCH APPRECIATED.

CF User,

11th February 2014

Legal in Bangalore

resident welfare association

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Replies (2)

If Akshaya Homes is given a contract then they will charge the Service Tax on the Association. If the Association is collecting more than Rs.5000/- per month from the Owners toward maintenance then the Association must collect Service Tax from the owners and must pay to the govt.

Rajiv,

11th February 2014

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There is a very important information to share with you. A new circular issued by the Government of India, Finance Ministry, regarding the applicability of service tax for the Resident Welfare Association.

What the Circular says-

® If a member’s contribution is more than Rs 5000/- towards the services provided by a RWA, service tax will be charged on the aggregate amount.

® If a member’s contribution is up to Rs 5000/-, service tax is not applicable.

For your reference, please find the link of the circular-
http://www.servicetax.gov.in/circular/st-circular14/st-circ-175-2014.htm

You can also refer this blog for further clarification on the Service Tax Circular- Scope of Service Tax on services provided by the RWA – Circular 10 Jan, 2014

A Strong Recommendation-

Consult the concerned Auditor of your apartment community for his opinion.

Reconsider the new clause and consult the auditor, in case you have been collecting service tax only on the incremental amount from your residents. For further assistance, kindly connect to the CommonFloor support team.

Kanthi Sridhar, Bangalore

11th February 2014

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