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Service Tax Circular No.175/01/2014–ST, 10-01-2014-

Levy of service tax on services provided by a Resident Welfare Association (RWA) to its own members.

Ministry of Finance had released a new circular on Jan 10, 2014 which was about the applicability of Service tax for resident welfare association (RWA). Following are some points which can help you in re-considering your current practice.

  • Service tax will be collected or levied on the amount more than 5000 paid by member/s towards the services provided by RWA.
  • Service tax is not applicable if the amount is upto 5000/-
  • If, in any financial year, taxable service of aggregate value doesn't exceed 10 Lakh then threshold exemption is available to RWA.
  • In case, RWA act as a pure agent, there will be no tax applied on the service. For example if RWA collects the bill amount for water consumed or electricity usage from the residents and remits it to the government without adding any extra charges, they don't need to pay any tax on the service as the same would be considered under non-taxable service.
  • Central Value Added Tax (CENVAT) credit can be availed by RWA.

Notification No: Service Tax Circular No.175/01/2014–ST
Date: 10-01-2014
File No: F. No.354/237/2013-TRU
Issuing Authority: Service Tax
Type: Circular
Subject: Levy of service tax on services provided by a Resident Welfare Association (RWA) to its own members

Download the complete notification.