Chit fund ...income tax and service tax implications

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

06 August 2013 My client is running a chit fund, he collects Rs 2000/- every month (60 months) from each member, and conducts a draw every month, the person who wins gets a prise money, at the end of the period, all the members will be alloted a plot of land each. ( developed with basic eminities like roads and water supply)
what will be the tax implications...at the time of collection of money and later on Pls guide.

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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06 August 2013 What is chit fund. It is contribution of members and the law of mutuality arises and so there is no services rendered and no service tax is applicable. The income earned is covered as business income or you can treat this as income from other sources and what ever installment you have given is an expense