Service Tax for Cooperative Housing societies
Service tax charge is charged on service provided by Cooperative Housing Society (CHS). In rules of service tax department, if a cooperative society crosses the collection of four lakh rupees from its members, service tax is warranted on taxable services. Total Service tax would be 12.24 % (service tax is 12% and 2% education tax on the top of it). Therefore collection of less than four lakh rupees per annum by a society does not warrant any service.
Service Department rule says, cooperative housing societies (CHS) can be taxed under the group of ‘Club of Association Services’ as included in u/s 65 (105) of the Finance Act, 1994 effective from June 16, 2005. ‘Club’ or ‘Association’ is classified u/s 65 (25a) of the Finance Act (No.2), 1994 as revised by the Finance Act, 2005.
The description mentioned above is quite extensive and envelops almost any individual or body of individuals providing service to the members of its society, amenities or returns for a payment or any other amount comes under. It is under these stipulations that the department levies tax on cooperative housing societies as service tax. Thus, since June 16, 2005, it is mandatory for cooperative societies to pay service tax.
For a cooperative society, service tax will have to be paid prior to 5th of every month. However, for March, the last month of the year, payment has to be done by 31st March. It must be noted that on the sum accumulated by the society together with transfer fees, donations, transfer charges, repairs and maintenance contributions, 12.24% will be gathered and the same needs to be deposited in the banks endorsed by the service tax department. The proceeds considering service tax have to be filed twice a year. For the period from April first to September thirtieth, the returns need to be filed on or before October twenty-fifth. For the second half of the year, the returns need to be filed on or before March thirty first.
In case of delayed payment, interest has to be paid at the rate of 13% per annum. The service tax department can exercise the power to impose fine as per the terms of Section 76 for non-payment or short payment of service tax and Section 77 for not filing return.
CENVAT credit is offered to cooperative societies in respect to service tax, which comprises all payments made by the society on which the society has paid the service tax, for instance, telephone bills, security charges, etc. Subsequently, all payments done on or after June 16, 2005, are entitled for CENVAT credit.
Interesting Links to follow:
http://answers.yahoo.com/question/index?qid=20070710225606AAWXEz5
http://www.dnaindia.com/report.asp?NewsID=1008540
Tags: Apartment India, Housing India, Housing Societies, Service Tax
I think that the service tax rates have been changed. you might want to revisit the article.
Large Cooperative Housiing…
Service tax charge is charged on service provided by Cooperative Housing Society (CHS). In rules of service tax department, if a cooperative society crosses the collection of four lakh rupees from its members…