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!
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.
A seemingly simple but complex issue in every apartment association is on how to arrive at the maintenance charges to be levied on the members. The issue is complex enough that it is impossible to please all the members with a single way of calculating the maintenance charges.
As discussed in the “Popular methods of calculating Maintenance charges” – societies have option of charging Per Square Feet (PSF) or Per Flat (PF) basis. While the regulations in most states is not very clear (or not enforced with necessary rigor), the model bye-laws of Maharashtra state provide a relatively clear answer to this debate. The answer at a high level is simple – follow a combination of per sft and per flat for various heads.
The same can be adopted by societies of all states (as most model bye-laws are derived works of the model bye-laws from Maharashtra State).
Types of Charges
There are quite a few types of charges that can be levied on members. The periodicity of levying these charges can be decided by the General Body of the Association. Usually charges like ‘Sinking Fund’ will be levied once in an year – and Maintenance Dues will be charged once in a month. Brief explanation of various charges is given below.
Service Charges (a.k.a Maintenance Charges in most societies)
This charge needs to be levied on per flat basis. This charge needs to be levied based on the expenses incurred by the society towards procurement of services. This includes all Staff Salaries (including society office staff, maintenance staff, security staff, housekeeping staff, technical staff etc.), Administration Expenses (internet, telephone, printing, stationary etc.), Auditor Expenses, Common Area Electricity Bill (excluding bill for Lift operations), Conveyance / Travel Expenses, Legal Expenses, Membership to local federations / bodies etc.
Expenses on repairs and maintenance of building of Society
These charges may be decided by General Body subject to minimum 0.75 percent (0.75%) of the cost of construction of flat/shop per annum. For example, if the construction cost is Rs. 1200/- per sft, this charge will be Rs. 9,000/- per annum for a 1000 sft flat. This is calculated on per sft basis and can be levied once in a year. This excludes Lift related repair & maintenance.
Expenses for lift repair, maintenance and for running the lift
This charge should be based on expenses incurred for Lift Repair, Lift Maintenance and Running of Lift, including Electricity Charges for Lift oeprations. This needs to be charged equally on all Members of the building where in lift is provided.
Sinking Fund (a.k.a Corpus Fund)
The exact amount may be decided by General Body subject to minimum of 0.25% of the cost of construction of flat per annum. This is calculated on per sft basis and can be levied once in a year. This is to be collected if the builder has not collected this amount at the time of selling the flats and handed over the corpus to the association.
This charge is to be levied based on number of parking lots in a flat. The fee per parking lot may be as decided by General Body of the Society.
This is applicable only in states where societies are authorized to collect property tax on behalf of Govt. The tax to be collected is determined by the state.
This charge is to be levied based on number of water inlets into a flat. The fee per water inlet may be as decided by General Body of the Society. In modern apartments / layouts, this charge can be calculated based on the reading from the water meters that measure consumption of the water by a flat.
Interest on defaulted Charges
This is the late payment penalty. The penalty scheme / amount is as decided by General Body. Most common practice is to levy simple interest not exceeding 21% p.a. But General body can decide a different way of calculating late payment fees that works best for them.
Non Occupancy Charges (NOC)
This is an additional charge on flats that are rented out. As per the law, this charge cannot exceed 10% of the Maintenance / Service Charges levied. You can refer to this article to get more details. The NOC cannot be charged if the licensee(tenant) is family member(Family Members includes husband, wife, father, mother, brother, sister, son, daughter, son in law, daughter in law, sister in law, brother in law, grandson and granddaughter).
The expenses spent on insurance of the building and equipment can be levied on the members in proportion to built up area of their flats. Extra premium charged by insurance on account of storage of specified goods in flat/shop should be collected from those flats/ shops whose storage of specific goods was the reason for extra premium.
This is levied based on per sft for the builtup area of the flat/shop.
Any other charges
As decided by General Body from time to time.
Following is a table indicating a comprehensive list of charges that can be levied by the Society / Apartment Association on the members. All charges levied must be derived from the expenses of the society. The table also indicates the correct way of arriving at these charges from the expenses and if they need to levied on per sft basis or per flat basis – as recommended by Model Bye Laws.
The article provides a framework for arriving at dues to be levied that is fair to all its members. A Housing Society that is ‘well managed’ needs to avoid taking the easy way out – by charging per flat or per sft basis. This is especially true for societies where there is no uniformity in size of the flats. Though at a first glance, it looks like there is much work and many heads for the amounts to be charged to adopt this, it is not really so. Once you get started you realize that its not as difficult as it appears. If you are new society, you can put this in practice right from day one. if you are an old society, but not following this model – its never too late for you to adopt this.
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