Services provided by Resident Welfare Society are taxable foo Rs.5000/- ,Recently CBEC has issued a circular for clarification of the some issues,these doubts & clarifications are given below:-
Circular No.175 /01 /2014 – ST
Government of India Ministry of Finance Department
of Revenue
Central
Board of Excise& Customs
Tax Research Unit
North
Block, New Delhi
10th
January, 2014
Subject: Levy of service tax on services provided by a Resident Welfare Association
(RWA)
to its own members –
regarding.
Service
tax on ‘club or association service’
which covers Resident
Welfare Association (RWA) was introduced with effect
from 16.06.2005, vide section 65(105)(zzze) read with
section 65(25a)[(25a) was later
renumbered as (25aa)].
Under the positive
list approach which was followed prior to 1st July 2012, exemption
was available under
notification No.
8/2007-ST
dated 01.03.2007, if the total consideration received from an individual member by the RWA for the services does not exceed three thousand rupees
per month. This
notification was rescinded vide notification
No. 34/2012-ST dated 20th June 2012,
with effect from 1st July,
2012.
2. Under the negative list approach,
with
effect
from 1st July,
2012,
notification
No.25/2012-ST [sl.no.28 (c)] provides for exemption to service by a RWA to its own members by way of reimbursement of charges or share of contribution up to five thousand
rupees per month per member for sourcing of goods or services from a third person for the
common use of its members.
Certain
doubts have been raised regarding the scope of the present exemption extended to
RWAs under the negative list approach.
These doubts have been examined
and clarifications are given below:
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Sl. No.
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Doubt
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Clarification
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1.
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(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
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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
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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?
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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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2.
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(i) Is threshold
exemption
under
notification
No. 33/2012-ST
available to RWA?
(ii) Does
‘aggregate value’ for
the
pusrpose of threshold exemption, include the value of exempt service?
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Threshold exemption available under
notification No. 33/2012-ST is applicable
to a
RWA, subject to
conditions
prescribed in the notification.
Under this notification, taxable services of aggregate value not
exceeding
ten
lakh
rupees in any financial year is exempted from service tax. As per the definition of
‘aggregate
value’ provided in Explanation B of the notification, aggregate value
does not include the value of services which are
exempt from service tax.
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3.
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If a RWA provides certain
services
such
as
payment
of
electricity
or
water bill issued by third person, in the
name of its members, acting
as a
‘pure agent’ of
its
members, is exclusion from
value
of
taxable service available for the purposes
of exemptions provided in Notification
33/2012-ST
or 25/2012-ST ?
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In Rule 5(2)
of
the Service Tax
(Determination of Value) Rules,
2006, it is provided that
expenditure or
costs incurred by a service provider as a pure
agent of the recipient of service shall
be excluded from the
value
of
taxable service, subject to
the
conditions specified in the Rule.
For illustration, where the payment
for an electricity bill
raised
by
an
electricity
transmission or distribution utility in the name of the
owner
of
an
apartment
in
respect of electricity consumed thereon,
is collected and paid by the RWA to the utility, without charging any commission or
a consideration by any other
name, the RWA is acting as a pure agent and hence
exclusion from
the
value
of
taxable
service would be available. However, in the case of electricity bills issued in the name of
RWA, in
respect of
electricity
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consumed
for common use of lifts, motor pumps for water supply, lights
in common area, etc., since there is no agent involved
in these transactions, the exclusion from the
value of taxable service
would not be available.
4.
Is CENVAT credit available to RWA
for
payment of service tax?
RWA may avail cenvat credit and use the
same for
payment
of
service
tax,
in
accordance with the Cenvat Credit Rules.
3. Trade
Notice/ Public Notice to
be issued. Hindi version to follow.
F. No.354/237/2013-TRU
[Raj
Kumar Digvijay]
Under Secretary to the Government of India