Applicaility of service tax on donation and building fund
This query is : Resolved
13 February 2016
Sir,
we are running recreation club which is registered under societies registration act. In which we have collecting from new member as Entrance fee; Building fund and Donation
Whether these three items are covered under service tax or only Entrance fee is covered under service tax? pl. clarify.
But we are collecting yearly subscription from members and monthly subscription for tennis and billiards
And also we are collecting some amount from cards section and guest fee for bar guests
My doubt is whether the income from cards section and bar guest fees are covered under service tax?
we are running recreation club which is registered under societies registration act. In which we have collecting from new member as Entrance fee; Building fund and Donation
Whether these three items are covered under service tax or only Entrance fee is covered under service tax? pl. clarify.
But we are collecting yearly subscription from members and monthly subscription for tennis and billiards
And also we are collecting some amount from cards section and guest fee for bar guests
My doubt is whether the income from cards section and bar guest fees are covered under service tax?
14 February 2016
"Club or association" is defined as any person or body of persons providing services, facilities or advantages, for a subscription or any other amount, to its members, but does not include such person or body of persons engaged in any activity having objectives which are of a charitable nature.
Since your Club is not of charitable nature, the consideration received from members for services provided by it are subject to service tax.
Notification 15 / 2005 - S.T. dated 7th June 2005 defines the term Club and scope of service:
"Club or Association" means
providing services, facilities or advantages, for a subscription or any other amount, to its members, but does not include-
(i) any body established or constituted by or under any law for the time being in force; or
(ii) any person or body of persons engaged in the activities of trade unions, promotion of agriculture, horticulture or animal husbandry; or
(iii) any person or body of persons engaged in any activity having objectives which are in the nature of public service and are of a charitable, religious or political nature; or
(iv) any person or body of persons associated with press or media;
The taxable service means any service provided or to be provided to its members, by any club or association in relation to provision of services, facilities or advantages for a subscription or any other amount;(Section 65 (105) (zzze) of the Finance Act, 1994)
The important part of the taxability clause are the words"facilities or advantages for a subscription or any other amount." Your club may not be charging any subscription at fixed intervals say monthly or annually, but to enjoy the facilities ad advantages of membership amounts are charges under the heads Entrance Fee, Building Fund & Donation are collected. In other words these nomenclature is just an euphemism for membership fees.
Irrespective of other statutes like Income Tax Act. Societies Registration Act, Trusts Act, etc. Finance Act 1994 (as amended) levies service tax on amounts collected from members, by whatever name called, for provision of services, facilities or advantages is subject to Service Tax.
Therefore all the sums collected under any of the heads is subject to Service Tax.
Since your Club is not of charitable nature, the consideration received from members for services provided by it are subject to service tax.
Notification 15 / 2005 - S.T. dated 7th June 2005 defines the term Club and scope of service:
"Club or Association" means
providing services, facilities or advantages, for a subscription or any other amount, to its members, but does not include-
(i) any body established or constituted by or under any law for the time being in force; or
(ii) any person or body of persons engaged in the activities of trade unions, promotion of agriculture, horticulture or animal husbandry; or
(iii) any person or body of persons engaged in any activity having objectives which are in the nature of public service and are of a charitable, religious or political nature; or
(iv) any person or body of persons associated with press or media;
The taxable service means any service provided or to be provided to its members, by any club or association in relation to provision of services, facilities or advantages for a subscription or any other amount;(Section 65 (105) (zzze) of the Finance Act, 1994)
The important part of the taxability clause are the words"facilities or advantages for a subscription or any other amount." Your club may not be charging any subscription at fixed intervals say monthly or annually, but to enjoy the facilities ad advantages of membership amounts are charges under the heads Entrance Fee, Building Fund & Donation are collected. In other words these nomenclature is just an euphemism for membership fees.
Irrespective of other statutes like Income Tax Act. Societies Registration Act, Trusts Act, etc. Finance Act 1994 (as amended) levies service tax on amounts collected from members, by whatever name called, for provision of services, facilities or advantages is subject to Service Tax.
Therefore all the sums collected under any of the heads is subject to Service Tax.
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14 February 2016
LOT OF THANKS FOR YR REPLY
14 February 2016
You are most welcome - glad you could get a solution.
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