At the end of a working week, all everybody wants to do is relax and spend some time with family. However, every month there is one event that can get in the way of doing that: maintenance collection. A few years back, the vicious cycle of payment dues billing, reminders and door-to-door maintenance collections kept most of the apartment management associations on their toes. Add the issues of defaulters and manual bookkeeping, and the weekends could easily get as busy as the rest of the week. Thanks to technology, the days when apartment management associations were reaching out to residents on a one-to-one basis to collect maintenance are long gone. Management associations now use sophisticated apartment management software, like ApnaComplex, to simplify their maintenance collection process to an extent of a single mouse click!
How has ApnaComplex helped the management associations in timely collections?
1. A timely reminder for payments: Instead of sending reminders to each and every resident one by one, the apartment management software empowers the management association to now send automatic reminders to all residents at one go via email/SMS. Residents don’t mean to default on maintenance payments, it’s their hectic schedules and absence of a timely reminder mechanism that makes them miss out on submitting the maintenance charges on time. A reminder system reduces the default rate up to a great extent. 2. Ease of paying maintenance charges:
TheApnaComplex App comes with a collection gateway that automates monthly maintenance payments. This eases the residents from the whole ordeal of coming to the society office just to drop a cheque or pay in cash.
3. Saves Reconciliation Efforts: Manually recording the amount received from the residents and reconciling all the payments can be quite a long process. With the advent of powerful tools like ApnaComplex, the entire reconciliation is taken care by the App. 4. Filter the list of defaulters: The apartment management software enables the management association to filter the list of defaulters. The entire process gets automated and a list of residents whose maintenance payments are due can be easily drawn out along with the penalty to be charged from them. Emails/SMS to be sent out to defaulters is also automated through the software reducing the manual work up to a great extent.
One of the misconceptions was that apartment management solutions are very costly. In many cases, this misconception was cleared, when a lot of apartments started using ApnaComplex, a cost-effective subscription-based leading apartment management software with zero hardware costs and an ongoing support. The cost of the software is directly proportional to the number of units an apartment has, making it more economical than ever for the apartment management associations.
Basic Introduction of GST and its Perspective as a Contractor and a Developer
GST (Goods and Services Tax) is one indirect tax for the whole nation, which is meant to be a unified indirect tax across the country on construction services and will make India one unified common market. The present structure of Indirect Taxes is very complex in India. There are so many types of taxes that are levied by the Central and State Governments on Goods & Services. It has been long pending issue to streamline and subsume all the different types of indirect taxes and implement a “single taxation” system called “GST”.
Implementing the GST will ease the compliance, uniform the tax rates and structures, remove the cascading effect of taxes levied by States & Centre, will improve the business competitiveness and will benefit everyone doing trade in some or the other form whether as a contractor or as a developer.
In the current system in India, tax is levied at each stage separately, by the Centre and the State, at varying rates i.e. 10.5% / 6% / 4.5% for service tax and different rates by different States, on the value of construction services. But under the GST system that is set to be introduced, tax will be levied only on the value added at each stage by the sub‐contractors, main contractors and developers or builders. It is a single tax collected at multiple value additions with a full set‐off for taxes paid earlier in the value chain by sub‐contractors and main contractors. It is pertinent to note that the inter credit of different taxes paid in the current regime be a service tax, VAT, CST, etc. to Centre or States are not allowed and thus becomes a part of the cost on the suppliers. Thus, under GST the final buyer / client will bear only the GST charged by the last person i.e. developer or builder or the contractor.
Structure of GST in India
In India, a dual GST is proposed whereby a Central Goods and Services Tax (CGST) and a State Goods and Services Tax (SGST) will be levied on the taxable value of every transaction of supply of goods and services.
The Dual GST is expected to be a simple and transparent tax with one or two CGST and SGST rates. The structure of the model law comprises of CGST Act, SGST Act and IGST Act. The dual GST model would give adequate flexibility to the States to levy taxes on a comprehensive base of goods and services at all points in the supply chain. Thus, financial liberty of the States would be maintained. GST is a consumption based tax. It is based on the “Destination principle”. GST is applied on goods and services at the place where actual consumption materializes.
The Centre and the States would have parallel jurisdiction for the entire value chain and for all taxpayers. The administration of GST under the three components will be as under:
Central GST (CGST) – to be levied on intra state trade and administered by the Centre
State GST (SGST) – to be levied on intra state trade and administered by the State Governments
Inter‐State GST (IGST) – to be levied on inter‐State trade and administered and collected by the Centre.
To the extent feasible, uniform procedure for collection of both Central GST and State GST is prescribed in the respective legislation for Central GST and State GST.
It can be noted that IGST will not be a Tax in addition to the SGST and CGST so one should not presume that IGST is a third tax but it is only a mechanism to monitor the interstate trade of Goods and services and further to ensure that the ultimate SGST is gone to the consumer state since the GST is a destination based tax.
Impact of GST on Co-operative Housing Society as well as Real Estate Sector
Implementation of the GST law will have a positive impact on the Co-operative Housing Society and on the real estate sector with expected reduction in its tax burden. The law will single‐handedly solve many of the challenges faced by the real estate sector. Heavy taxes that are being borne in a non‐transparent manner are expected to be very transparent in GST. It is unclear what would be the rate of GST applicable on construction services, hence it would be difficult to confirm the exact impact on GST on the Co-operative Housing Society. However going by the informal discussion, it is learnt that the rate is expected to be something between 18‐20%, which is what the current rate directly and indirectly being borne by the construction sector. Besides the simplicity in taxation, GST would bring in other advantages like transparency, seamless credits, ease of business by lack of border controls, promoting economic efficiency through a destination based taxation system. Overall Construction costs would be reduced to some extent which would benefit the end consumer. Apart from the advantages, the complexities in the compliance and assessments shall also be greatly reduced as the tax laws would also be unified.
There would be lesser burden of tax on purchases of major inputs like cement and steel, as tax credits would be available for set off at various stages which are currently restricted. The restrictions on credit utilization would be eliminated, thus strengthening the credit chain in the system. If this so happens, there will be increased credits available in the procurement chain and hence better utilization of input tax costs towards output GST Liability.
Since GST may be levied on a single value, the current issue of levying tax on tax (VAT on central excise duty) is likely to be removed. Hence the cascading effect of taxes shall be removed with the resulting transparency which will significantly reduce tax evasion through more efficient transaction‐tracking methods, and improved enforcement and compliance. Hence the implementation of GST will enhance the investment in Housing Societies & real estate sectors.
It is widely expected that GST would reduce the construction cost in the hands of developer and thereby aid in reducing or at least maintaining the current level of prices in the housing societies as well as in the real estate sector.
With the new cashless wave gaining momentum in India, societies all over are adopting various ways of doing their bit to forward this initiative. Here’s why everyone should go cashless starting from today –
(Firstly, to avoid this…)
Track dues and payments automatically
Now, Indians will make payments for most purchases/liabilities online. Automatic withdrawal and payment from connected accounts are also an option. So, there are no dues pending at the end of every month and that gets ticked off your to-do list instantly, without even having to make a confirmation.
Cloud-based auto sync in real-time
All transactions are updated in books online and accounts are kept up-to-date after every transaction. Even people not so good at math will like this number game. Going cashless isn’t so bad after all.
No long queues to wait around in
Queues that move quickly are a crowd favourite. A place where personal presence is optional is looked forward to by everyone, not just by introverts. Anyone who can’t be at a particular place at a specific time would appreciate such a development.
Countrywide acceptance of this stance
This line of thinking will be eventually accepted and put into practice all over the nation. So, purchasing most things gets easier when done directly using an e-account.
Chances of robbery & theft are low
When there isn’t enough to rob, why would someone painstakingly make the effort to break in and steal? Travelling outstation also gets easier since staying connected with your funds becomes more flexible. This is a great move for tourists looking forward to exploring our country.
You can’t get lazier than swiping a card / pre-storing payment details just ONCE!
There will be no such thing as overusing your card, especially during difficult times. Swipe it for a purchase and you’re good to go. No more hunting for change in your pocket / wallet / bag / other nooks and crannies they managed to slip into. Added bonus: It just adds to your laziness. Now, who would want to go against that?
But, a move like this cannot be taken for granted. Regular monitoring of one’s own funds is the primary reason for this move to be able to thrive. You can check your account details online without the hassle of visiting the bank by visiting the website provided by it instead. The web and mobile applications made available by banks equip you with another option to go cashless.
Let’s make a conscious and informed effort towards having a cashless society.
Going cashless in your society is easy with Collection Gateway by ApnaComplex. Try it here. Go cashless today!
Apartment Associations are liable to pay service tax to Government of India when one or more members of the association has contributed more than Rs. 5,000/- per month to the association (refer this post for clarity). As per the law, the liability is on the Society to remit service tax – irrespective of the society collecting the same from members.
The society has couple of options to take to pay the service tax to the government:
Option-1: Service Tax is a destination based tax – means the service tax can passed to the members in question directly, collected and then paid. In societies where the contribution is same by all members or in societies where every member is contributing more than Rs. 5,000/- there is usually no issue in collecting the same from all members and remitting the same to government. However, in quite a few apartment complexes, there is a situation where there are only few members who cross the Rs. 5,000/- per month limit. This means that these few members will have to pay significantly higher charges than the rest and it can create disharmony in the society. There will be pressure on the executive committee to review the total charges collected to keep it below Rs. 5,000/- so that few members do not end up paying significantly high rates.
Option-2: Do not to collect the service tax from the members – but compute the service tax to be remitted to Government on cum-tax basis and remit the same. For example, if there are 10 members who are paying Rs. 6,000/- per month – then the service tax to be paid can be calculated on Rs. 60,000 (total contribution by service tax eligible members). The tax to be paid would be 60000 * 12.36/112.36 = 6600/-. This is a much preferred option for cases where only few flats are to pay service tax. The society can remit this payment to Govt. Also, since society can claim cenvat credit on the service tax to be paid this approach would ensure there is no additional burden on few members of the society.
A new circular has been released by Service Tax department on 10th Jan 2014 attempting to clarify the confusion surrounding applicability of service tax on dues collected from Members.
Based on the past circulars of March 2012 and June 2012, up to Rs. 5,000/- per month per member of collection is exempted from service tax. Even though there are varied opinions on interpretation of the same, few societies where the collection was above Rs. 5,000/- were only collecting service tax on the additional amount.
The latest circular clarifies this particular aspect – if a member is paying more than Rs. 5,000/- per month – service tax needs to be collected on entire amount and not just on the amount exceeding Rs. 5,000/-.. For example, if some one is paying Rs.5,100 the society is now liable for service tax of 5,100*12.36% = Rs. 630/-.
Couple of other clarifications as well which will reduce some confusion:
Service tax is only applicable on the amount collected from members whose contribution is more than 5,000/- per month per flat. If in a society there are members who are contributing less – the amount collected from them will not be liable for service tax.
Service Tax is not applicable where money is collected by society from members to pay to a third party purely as a convenience – like paying water bills issued to members in bulk.
Read below the extract from the circular that attempts to clarify various doubts:
(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 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?
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 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.
(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?
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.
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 ?
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 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.
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.
We strongly recommend you reach out to your auditor for advise. Especially, if you have been collecting service tax from members only on the incremental amount – reach out to your auditor on the impact of this circular for past collections.
Even though adding Service Tax is relatively straight forward in ApnaComplex – do reach out to our ever helpful support team if your society is charging service tax and needs assistance.
The Union Budget for the fiscal year 2012-13 has raised the service tax on apartments to 12.36 % from the proposed 10.3% in the 2010 Union Budget. The new service tax is applicable to building constructions including apartment complexes, flats, row houses, and industrial and commercial complexes.
The new tax policy poses many important questions such as whether the builder or the buyer will be liable for this service tax, will payment for amenities like preferred location charges, apartment maintenance fee and parking space charges also attract service tax. Here is a breakdown of how the new service tax is likely to affect home buyers.
Applicable Service Tax On Apartments
According to the Union Budget 2012-13, under construction buildings and properties will henceforth attract a service tax. A building is considered complete only after a completion certificate has been obtained by the builders from the concerned authorities. Since most buyers book their houses when it is still under construction, all payments made by the buyer during the construction period will be taxable.
The good news is that the cost of land, materials, and other construction related expenses, which comprise around 67 % of the property price, do not come under the service tax bracket. The buyers are required to pay service tax only for the remaining 33 % of the cost of the property.
Any modification within and without a building complex will also attract a service tax, as will preferential location charges, and cost for amenities such as swimming pools, landscaping, pavements, and lakes.
Maintenance fees, if above a threshold of Rs. 5000 per month, as against the previous threshold of Rs. 3000 in the 2010 Union Budget, will also attract a service tax.
Exemption Of Service Tax
Buyers are exempt from service tax if the total payment is made after the builder has obtained a completion certificate for the property.
Resale of properties will not attract a service tax as the property would already have a completion certificate.
Parking spaces will no longer attract any service tax as per the latest Union Budget.
Construction done under the Rajiv Awaaz Yojana and the Jawaharlal Nehru National Urban Renewal Mission, as per notification no. 28/2010, dated 22nd June 2010, are also exempt from service tax.
The new service tax on apartments leaves a few doubtful questions such as whether or not a buyer is liable for service tax for partial amounts that are paid after the builder has obtained a completion certificate. Moreover, if a buyer decides to withdraw from a housing scheme, how will the service tax be adjusted on the amount refunded to the buyer? Further, if there is a significant delay in construction, will the builder be required to refund the service tax to the buyer if they choose to withdraw or the project is indefinitely closed?
Have more information to share with us? Let us know in the comments below!
Get your Society on ApnaComplex – Today! ApnaComplex is India’s most comprehensive web based housing society accounting, management and communication software. It is designed to make the life of residents and owners a lot better by bringing in more transparency and accountability in managing a housing society. Check out the features of ApnaComplex and sign up your society today to get the benefits! We offer a free 30-day trial as well so that you can try before you buy!
One more enhancement to our Housing Society Accounting Software! With recent Service Tax Regulations that came into effect from July 1st 2012 – most income earned by a Co-operative Housing Society has come under the ambit of Service Tax. Unlike the maintenance charges where Service Tax is applicable only if it exceeds Rupees Five Thousand per member per month – additional income that the society earns usually in form of renting out premises for commercial activities or promotions come under the ambit of Service Tax. (Please check with your auditor for exact interpretation of the regulations and if your society needs to collect Service Tax on all the income generated through sources other than members.)
While all along your favorite Housing Society Software – ApnaComplex – had the ability to record service tax collected with help of Journal entries, a much more easier and straight forward way is now supported in the Non-Member Income module. When adding new Non-Member Income entries, you can now explicitly specify service tax amount being collected from the third-party. This amount would automatically go into the Service Tax Payables core account. When the collected Service Tax is deposited to Government, you can record the same in the system under Expenditure->Vendor Payables->Pay Tax/TDS tab.
Admins can edit/revert/delete the Non-Member Income entries to change the service tax or other elements of the entry to rectify any mistakes.
The bulk upload feature for Non-Member Income also supports the service tax making it lot easier to import data into ApnaComplex.
In addition, admins can now update their PAN and Service Tax Registration numbers in Complex->Settings and these would automatically be reflected on all accounting vouchers.
Want to maintain financials easily and transparently in your Housing Society? – Get on to ApnaComplex – Today!
1. Society Treasurers / Auditors can Upload the bank statement in ApnaComplex reconciliation module.
2. Society Treasurers / Auditors have a choice to ignore those transactions that are already reconciled.
3. ApnaComplex attempts to match the bank entries with the ledger entries based on narration, cheque number, deposit/withdrawal amounts.
4. If a match is found, ApnaComplex marks the ledger entry reconciled and updates the bank date field of that ledger entry
5. If multiple matches are found, the same is updated in the reconciliation notes.
Summary of the reconciliation is presented along with the list of entries present in the bank statement that could not be reconciled. Treasurers can download these entries into an excel to maintain a record. Treasurers / Society auditors can validate and overwrite any records if needed. In addition, the auto-reconciliation can be done any number of times.
Auto-reconciliation should save significant efforts for Treasurers / Auditors using ApnaComplex.
Want to maintain financials easily and transparently in your Housing Society? – Get on to ApnaComplex – Today!
We are happy to announce a key new addition to ApnaComplex feature set – ‘Automated Scheduled Reports’ – that is available for every society.
With this feature, any one in your society can now receive various reports by email at a pre-defined and periodic intervals (OneTime, Daily, Weekly, Monthly).
You can schedule reports to be sent to entire community/owners/committee/sub groups or to a selected set of individuals.
Some of the “new” things you can do in your society with this feature:
1. Improve Financial Transparency by auto-publishing Income/Expense statement to all owners every month!
2. Schedule to send List of all expense details for the week to the entire committee!
3. Get End of the day cash/bank balances on a daily basis!
4. Automatically send updated key contact list once a month to entire community!
5. Get Bouncing email ID report once a week!
and much more… All just by configuring for few minutes.
There are around 40+ reports available for scheduling. As always, the list will continue to grow as we move forward.
To start using this feature, go to Reports->Reports List and click the ‘Scheduled Reports’ button.
Please note that the system shall execute and send reports post mid-night every day.
Prepayment Penalty is a nightmare that is suffered by the individual borrowers who take home loans for buying apartments. A prepayment loan generally means that all debts have to be paid before the due date. Prepayment penalty usually ranges between 1% or 5% on the total loan taken depending on the bank.
The NHB (National Housing Bank) sent out a notice to all the HFCs (Housing Finance Company) recently to levy any prepayment charges. This decision has been greatly applauded by the RBI (Reserve Bank of India). The ban is not only levied on the prepayment of the floating rate home loans but also the borrowers of the fixed rate home loan schemes
However, if you have taken a Prepayment Loan you just need to follow a few simple rules. Here’s a look at them
Rule #1 Negotiation With Your Bank
Before transferring your home loan, do let your bank know regarding why you have planned to pay your loan beforehand. If the EMI on your home loan is unaffordable to you or the interest rate is sky high, then the bank might grant you certain options like extension in tenure, partial repayment or a relaxation in the home loan EMI.
Rule #2 Switching to a Floating Rate Scheme From a Fixed rate Loan
Some of the borrowers let you choose a floating scheme of payment if you are finding a difficulty in paying your home loan. The floating loan scheme comes 1 or 2 percent cheaper than the fixed rate loan scheme.
Rule #3 Partial Prepayment
If the pre-play is taking a toll on your budget and the interest rate is too high for you to pay up; talking to the bank is always an option. The bank can allow you to make partial prepayments and lower the principal amount; they can also reduce the outstanding loan amount. Many banks have the option of a partial prepayment of the loan, which does not exceed 25% of the total loan amount.
Rule #4 Prepayment of the Home Loan from Your Source
In case you decide to go for a full loan prepayment or opt for a foreclosure with own funds, no penalty amount will be levied on you. These funds can be a maturity of bonuses from sale of assets and employment or life policies.
Home Loan is a major source of fund when you buy a property. The Home Loan EMI or the interest rate varies from one bank to another. Hence, it is very necessary to plan and choose an interest rate or an EMI or a home loan prepayment.
This article aims at collating and providing information for benefit of ApnaComplex customers and blog readers. While ApnaComplex has taken every care to ensure the information is accurate, we suggest to please use it only as a guidance for further discussion and action with help of relevant professionals.
Get your Society on ApnaComplex – Today!
ApnaComplex is India’s most comprehensive web based housing society accounting, management and communication software. It is designed to make the life of residents and owners a lot better by bringing in more transparency and accountability in managing a housing society. Check out the features of ApnaComplex and sign up your society today to get the benefits! We offer a free 30-day trail as well so that you can try before you buy!