Service by an unincorporated body/non- profit entity under Mega exemption notification :

Service by an unincorporated body or a non- profit 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) as a trade union;

(b) for the provision of carrying out any activity which is exempt from the levy of service tax; or

(c) up to an amount of Rs 5,000 per month per member for sourcing of goods or services from a third person for the common use of its members in a housing society or a residential complex

is exempt from service tax.

1. Trade union means any combination, whether temporary or permanent, formed primarily for the purpose of regulating the relations between workmen and employers or between workmen and workmen, or between employers and employers, or for imposing restrictive conditions on the conduct of any trade or business, and includes any federation of two or more Trade Unions. 2. Residential complex means any complex comprising of a building or buildings, having more than one single residential unit.

Points to note: Circular No.175/01/2014 ST dated 10.01.2014 has clarified the following in relation to exemption available to services provided by a Resident Welfare Association (RWA) to its own members:

(i) If per month per member contribution of any or some members of a RWA exceeds Rs 5,000, entire contribution of such members whose per month contribution exceeds Rs 5,000 would be ineligible for the exemption under the said notification. Service tax would then be leviable on the aggregate amount of monthly contribution of such members.

(ii) Services provided by a RWA in the name of its members, acting as a ‘pure agent‘ of its members, are excluded from value of taxable service available for the purposes of SSP exemption or exemption provided under mega exemption notification. For example, where the payment for an electricity bill raised by an electricity transmission or distribution utility in the name of the owner of an apartment in respect of electricity consumed thereon, is collected and paid by the RWA to the utility, without charging any commission or a consideration by any other name, the RWA is acting as a pure agent and hence exclusion from the value of taxable service would be available. However, in the case of electricity bills issued in the name of RWA, in respect of electricity consumed for common use of lifts, motor pumps for water supply, lights in common area, etc., since there is no agent involved in these transactions, the exclusion from the value of taxable service would not be available.

(iii) RWA may avail CENVAT credit and use the same for payment of service tax, in accordance with the CENVAT Credit Rules, 2004.