Rate of taxation applicable to rwa

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Querist : Anonymous

Querist : Anonymous (Querist)

27 November 2013 Income of an RWA is exempt from tax based on the concept of mutuality. However, income from non-members such as renting of a space to a shop, collection from non-members for advertising on the notice board is taxable in the hands of the Resident Welfare Association. What is the rate of taxation applicable to RWA. Is is the same as individuals (as per the slab) or a flat rate of 30%.

Regards,
SP

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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27 November 2013 In my view tax rate applicable to an AOP with indeterminate share of its member would apply and the same is 30%.
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Querist : Anonymous

Querist : Anonymous (Querist)

28 November 2013 Dear Sir,

Many Thanks for your prompt reply. Much appreciated. Do you think the indeterminate share of the members should be considered. As per the by-laws of the RWA, members are not entitled any share/profit of the RWA during the life time of the RWA. In case of dissolution of the RWA, any surplus remaining after paying off the liabilities will have to be given to an organisation with similar objectives.

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CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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28 November 2013 Also, there is a provision as regards the taxable income of any of the members of the AOP. If any member is having taxable income, in such a case also AOP is charged @ maximum marginal rate.
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For getting exemption about the end use of the funds, Registration U/s 12A is the primary requirement.
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Querist : Anonymous

Querist : Anonymous (Querist)

28 November 2013 Dear Sir,

Will it make any difference in the tax rate if the AOP is registered as a Co-operative Society or a society registered under the Societies Registration Act, 1860. Refer Section 167B of the Income Tax Act.

Kind Regards,
Sunanda

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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28 November 2013 Section 167B excludes co-operative societies from maximum marginal rate.
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Co-operative Societies are taxed on the basis of prescribed slab rates.
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Querist : Anonymous

Querist : Anonymous (Querist)

31 December 2013 Dear Sir,

Coming back to the same query regarding tax rate applicable to a society. A resident welfare association is registered under Societies Registration Act 1860 hence normal slab rates applicable to an individual are applicable to the society. Secondly, a society registered under Society Act 1860 is not considered either as an AOP or BOD.

Status of an assess as per the ITR 5 can be either of the following:
1) Firm 2)local authority 3) Co-operative Bank, 4)Other cooperative society 5) LLP 6) any other AOP/BOD or artificial juridical person. Which of the above-mentioned status should be selected for a society registered under Societies Act.

The Assessing officer has applied maximum marginal rate (30%) and has raised demand. Whereas the assess had applied slab rates applicable to an individual.

Kind Regards,
Sunanda