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Service Tax Implication on Co-operative Society

Service Tax - By: - Richi Jain - Dated:- 27-6-2016 - With the passing of days, a culture to form a Cooperative Society has been increased which helps in pooling of the fund for the own benefit of people. Since, the co-operative society has different structure and formation, it is enthralling to note that how these societies are deal with in Tax laws. This article attempts to highlight the key areas and implications of Service tax laws on the Cooperative society. Meaning of Co-operative Society I .....

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ervices provided by society to its members were said to be subject to Service tax under the category of Club or Association Service . Section 65 (105) (zzze) of the Finance Act, 1994 (the Act) inserted with effect from 16 June, 2005, defined and covered any taxable services provided by a Club or Association in relation to provision of services, facilities or advantages for subscription or any other amount. Also, as per 65(12) of Banking and Financial provided by the Cooperative Society have the .....

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e banks for providing banking services to their members. Partial Exemption to Co-Operative Society Services provided by society to its members are exempt subject to the specified limit in terms of Entry 2 of mega exemption notification no. 25/2012ST dated 20.06.2012. The entry reads as follows: Service by an unincorporated body or non­profit entity registered under any law for the time being in force, to its own members by way of reimbursement of charges or share of contribution - (a) &helli .....

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ty are liable to pay Service Tax under Reverse Charge on payments made to Goods Transportation Agency. Since, Cooperative Societies are not covered under the definition of Body Corporate, no other liability exist on them to pay Service tax under reverse charge. CENVAT Provisions for Co-Operative Society It is needless to add that if co­operative housing society is liable to pay Service tax, it can also claim CENVAT credit on input services received by it like security, housekeeping, garden m .....

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ar year does not exceed ten lakh rupees then society will enjoy benefit of threshold exemption. Exemption for Service Tax if Society is working as Pure Agent The CBEC s Education guide in para 7.11.8 clarifies that if resident welfare association or any society is working as pure agent i.e. service is provided on actual reimbursement basis or without any mark­up for procuring any goods or services from a third person, then the amount collected by the association / society from its members ma .....

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is cases, society is not acting as an agent but incurring these expenses for the members of the society. Deeming Fiction of two separate identities A Co-operative Society is registered under the Cooperative Society Act. After registration a society becomes a separate legal entity with limited liability to its members. The doctrine of principle of Mutuality postulates that all the contributors to the common fund must be entitled to participate in the surplus and that all the participators in the .....

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