Keep track of your shortlisted properties here.
Shortlist a property to get started.
The Service Tax Return is required to be filed by any person liable to pay the service tax. A small service provider whose aggregate value of taxable services rendered in the previous year has not exceeded the limit of Rs 10 Lakh is exempted from Service Tax.
One important question by apartment owners and it Association is- “Whether the service offered by association to its members are liable for Service Tax?” Yes, Apartment Owners Association is liable to pay Service Tax.
An apartment owners association or Residents Welfare association or Housing Society can register themselves as service providers and get Service Tax register number for filing returns. Services provided by associations are taxed under the separate category of club or association’s services. For maintenance/repair, contractors can be appointed by the association who would bill the association for their services. If the association pays the contractor and gets the amounts reimbursed by the members, the same can be taxed in the hands of the association unless the association can be said to have incurred the expenditure as a pure agent of the service receiver (member) in which case the amounts reimbursed may be excluded.
According to Source, an Apartment owners Association, Residents welfare association or society who’s total consideration received from an individual member for providing service does not exceeds Rs 3000 Per Month, is eligible to avail of exemption from levy of Service Tax.
An Association or society shall be eligible to avail credit of the service tax paid by association to other service providers if both the input and output services fall under same category of service.
An association can collect service charge from its members for the providing services, facilities, advantages or maintenance of apartment complex. This reduce its Service Tax liability to some extent and net or total tax liability of association will be difference of amount paid to service provider and amount received from their members. Once the service tax on the input service has been paid, association can claim for Service Tax Credit.
The Finance Act, 2002 has amended Section 94 of the Finance Act, 1994 to provide for credit of Service Tax paid on input services used in the output services where both the input and output services fall within the same category of taxable services.
In terms of Rule 3 of the Credit Rules an output service provider shall be allowed to take credit of the Service Tax paid on input service in the following manner, namely:-
The service provider is required to maintain records reflecting the following details
Credit of tax on input service will be available only if service tax is payable on output services. If output services are exempt from tax or not taxable at all, credit of input service tax is not available. However, if input service is partly used for taxable service and partly for exempt or non-taxable service, credit of service tax paid on input services is available as per provisions of rules 3(4) and 3(5). [Rule 3(3) of Service tax Credit rules].
apartment owners association, Apartment Owners Association bangalore, Association collect Service Tax from Members, Avail Service Tax Credit, Collecting Service Charge from Members, Finance Act 1994, Finance Act 2002, How To Reduce Service Tax Liability, input service is in relation to output service, Reduce Service Tax Liability of Apartment Owners Association, Reduce Service Tax liability of Association, Service Provider, service tax, Service Tax Credit, Service Tax exemption, Service Tax Return
CommonFloor Property Search Mobile App now available on Android, iOS and Windows!
There is lot of confusion reg applicability of service tax in residential apartment associations in Chennai. I understand that no apt association is liable to pay service tax if annual gross maintain charges is within limit of 12 lacs – It is also not applicable where monthly maintainance charges per individula flat is within INR 3000/- The association provides services of maintaining security services , generator services, lift , maintaining common areas etc., Now my query is A- services include expenses of actual electricity charges, salary payments for security , salary for office staff , salary for cleaning staff , lift maintenance etc., etc., In the apt flat sizes vary from 1500sft to 3000sqft. Maintenace charges are less than 3000 per flat in most of the cases ?? Since it is large number of flats total maintenance charges are more than INR 12 lacs — Will service tax is liable for only those flats where monthly charges are more than INR 3000 or is it applicable for all the flats ? Is there any abatement allowed ??? -query sent on 1503-2012
The threshold for service tax is increased from Rs 3000 to Rs 5000 as per budget presented on 16-Mar-2012. The service tax on payment by all apartments becomes applicable if any one is required to pay Rs 5,000 per month (w.e.f. 1-Apr-2012 or Rs 3,000 upto 2011-12)
There are different opinions reg applicablity of Service Tax if only some apts out of all apts are charged maintenance charges which are less than 3000pm ( from 1-4-2012 incresed to 5000pm )- One opinion is that ST is applicable to only those apts where charges are more than prescribed minimum limit. Some other opinion is that it is applicable on all the apts even if minimum limit is even for 1 flat-
However logically the first point seems to be more correct. In a large colony ( say comprising of 200 flats )only very few pay minimum threshhold limit — However ST is not collected and payable from all flats – Can somebody highlight more on this point- with legal points
Mr Makhan is correct when he says that there is lot of confusion about applicability of service tax. This is because it started with levy of service tax on clubs in 1994(?) and the apartment associations were included in 2007. The opinions differ because there is no single clause that levies the tax. It is combination of various rules that started in 1994 and were amended every year. The ‘experts’ give different opinions depending upon how thorough they are. I would suggest Mr Makhan to be practical and go by his chartered accountant who is going to audit the accounts
Mr. Batra,
I am living in a colony consisting 1000+ apartments. We have not yet formed RWA. But, there is maintenance agency working for us and we are paying monthly maintenance charges directly to the maintenance agency. Amount of maintenance charge per month is less than Rs.5000. Maitenance agency should charge ST on the maintenance bill?
Mr Zhaver = We are now getting into details specific to your apartment complex. For detailed exchange of information regarding your complex pl write to me on arunbatra99@gmail.com
Dear Sir
Our apartment consists of 196 flats at Bangalore. Each of us paying maintenance charges Rs.1000/- per month and Rs.200/- as water charges. Shall we register under service tax and file returns. If so please tell us that we shall take credit of input tax for securities and house keeping payments.
Hi, I do believe this is an excellent website. I stumbledupon it
I’m going to come back once again since i have book marked it.
I have been exploring for a little for any high-quality articles or weblog posts on this sort of space . Exploring in Yahoo I eventually stumbled upon this site. Reading this info So i am glad to express that I’ve an incredibly excellent uncanny feeling I found out exactly what I needed. I so much definitely will make certain to do not put out of your mind this web site and give it a look on a continuing basis.