Hand Book on Service Tax

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1. Service tax on society

1.1. Applicability of service tax to society

As per section 2(44) - definition of “service”, an unincorporated association or a body of persons, as the case may be, and a member thereof shall be treated as distinct persons.
Accordingly, if services provided by a society or club to its members would be taxable provided other conditions relating to taxability of service are satisfied.

2. Exemption to society

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As per entry no. 28 of mega exemption notification no 25/2012-ST, following exemption has been provided for society:
Service by an unincorporated body or a non- profit entity registered under any law for the time being in force, to its own members by way of reimbursement of charges or share of contribution -
(a)     as a trade union;
(b)     for the provision of carrying out any activity which is exempt from the levy of service tax; or
(c)     up to an amount of five thousand rupees per month per member for sourcing of goods or services from a third person for the common use of its members in a housing society or a residential complex;
Based on above any society has received any amount:

(i) for any services or activity which are exempt from service tax (e.g. Municipal tax, water tax, payment made to central or state government) or

(ii) by way of reimbursement of charges or share of contribution up to Rs. 5,000 per month per member for sourcing of goods or service from a third person for common use of its members in housing society or residential complex would be exempt from service tax.

1.2.2.      If income (i.e. total receipts less exempted amounts) of society during year does not exceeds Rs. 10 lacs, in such case benefit of small scale service provider as per notification no. 33/2012-ST, dated 20th June, 2012 would be available.

1.3.     Taxability on society

If society has total income (i.e. total receipts less exempted amounts) of more than Rs 10 lac in year and receives following amount from:

·         If housing or residential society receives any amount of maintenance charges from commercial unit would be taxable.

·         If housing or residential society receives maintenance charges of more than Rs 5,000 from any member then such maintenance charges would be liable for service tax.

Reimbursement charge means charge levied on the members to recover the cost incurred in providing maintenance services by society. Share of contribution means indirect charge recovered by contribution to special reserves funds, such as sinking funds and the like, repair fund, Share Transfer Premium, Vehicle parking charges, non occupancy charges, etc.