the entire contribution of such members would be ineligible for the exemption.”
RWAs provide a host of services like maintenance of common areas, facilities including lift, water, health and fitness centre, swimming pool, payment of electricity bills for the common area and lift among other things.
Further, in cases where the RWAs act as pure agents and provide services to its members, like submitting electricity bill of a member to the discom, it will be exempt under the service tax. “Electricity has been one of the major issue as in many cases, RWAs have been acting as pure agent on behalf of residents,” Sapra said.
RWAs, it has now been clarified, will also be eligible for CENVAT credit for the service tax paid, which ultimately will trickle down to benefit taxpayers, Sapra added.
Regarding issue of discharge certificate under VCES and availing CENVAT credit
The government announced the voluntary compliance encouragement scheme (VCES) last year with an aim to nudge tax evaders to come forward and clear their dues without attracting any penalty, interest and prosecution.
According to the scheme, a service tax defaulter wanting to avail of the scheme could pay the tax dues in one or two instalments without paying any penalty and interest by filing a truthful declaration. It provided for self-declaration and payment of service tax dues from October 1, 2007 to December 31, 2012. The defaulters had to declare their dues by December 31 and pay 50 per cent of the total amount. The rest is payable without interest by June 30 this year and with interest by December 31.
The department has clarified that while a minimum of 50 per cent tax dues were to be paid by December 2013 in lumpsum, there is no such condition to pay the remaining amount. The remaining 50 per cent can be paid in instalments before June this year without any interest while any amount remaining unpaid thereafter can be paid by December-end with interest for the period of delay beyond June.
The department has told “payment of 50 per cent tax dues in lump-sum may not be insisted”.
Similarly, the department has also clarified that taxpayers can avail of CENVAT credit for tax paid under the voluntary compliance encouragement scheme after obtaining 'discharge certificate' from the department. The certificate will be issued by the department within seven working days from the date of furnishing details of payment of full tax dues.