Service Tax

Annexure A

Circular No.175 /01 /2014 – ST
F. No.354/237/2013-TRU

Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise& Customs

Tax Research Unit
North Block, New Delhi

10th January, 2014

Service tax on ‘club or association service’ which covers Resident Welfare Association (RWA) was introduced with effect from 16.06.2005, vide section 65(105)(zzze) read with section 65(25a)((25a) was later renumbered as (25aa)). Under the positive list approach which was followed prior to 1st July 2012, exemption was available under notification No. 8/2007-ST dated 01.03.2007, if the total consideration received from an individual member by the RWA for the services does not exceed three thousand rupees per month. This notification was rescinded vide notification No. 34/2012-ST dated 20th June 2012, with effect from 1st July, 2012.
Under the negative list approach, with effect from 1st July, 2012, notification No.25/2012-ST (sl.no.28 (c)) provides for exemption to service by a RWA to its own members by way of reimbursement of charges or share of contribution up to five thousand rupees per month per member for sourcing of goods or services from a third person for the common use of its members.
Certain doubts have been raised regarding the scope of the present exemption extended to RWAs under the negative list approach. These doubts have been examined and clarifications are given below:

Sl. No. Doubt Clarification
1. (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...