Is Service Tax applicable on maintenance collected by Apartment Associations?

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  1. Rajiv S Prabhu

    Rajiv S Prabhu New Member

    Our Apartment Owners Association in Bangalore, has 483 members by virtue of their owning apartment of various types i.e. 2, 3 and 4 bedrooms of varying measurements.In order to undertake maintenance of the common area in the complex and the security the association has engaged two service providers for upkeep the premises and the security. These agencies raise monthly bills on the association where in they also levy service tax on the monthly fees payable.

    The association in turn levies a monthly maintenance charge to the owners which is collected on a quarterly basis. The maintenance charges payable by the owners are reckoned on the basis of the area of the apartment and the a rate (Rs./sq ft which is the total monthly amount divided by the total area of all the apartments.). The association is a non profit making organization/society and works on a no profit no loss basis and all the officer bearers are representatives of the owners and servicing the association on a rotational basis without any remuneration whatsoever.

    1. A doubt has now arisen as to whether the owners are required to pay service tax on the monthly maintenance amount paid by them to the association.

    2. Similarly in case the association decides to take up some Capital Expenditure Project for the upkeep of the complex or its facilities and decides to collect a one time fixed sum from the owners whether service tax is payable on the amount collected.

    Your guidance in the matter is requested.
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