As per the Income Tax Act of 1961, co-operative societies are liable to pay taxes. However not every income of the society can be termed as a taxable income. Let’s look at the expenses that are eligible for tax payment
The main source of income for society is through the maintenance charges paid by the residents. The money collected is used for various activities like salaries of security, maintenance, electricity bills and lift charges. The management committee collects the maintenance fees (link to the maintenance fees blog) and then pays the relevant charges. This is not taxable not even the amount which is leftover post clearing of pending dues. The penalty charges collected due to late payments are also excluded from taxes
Interests from FD’s and Investments
Sinking funds, corpus fund, and other funds are kept in savings accounts in co-operative banks. Since these are not to be used funds, they often grow to become huge amounts. As the amount is more the interest earned by the society also grows. Since 2016 the government has made the interest earned on such deposits is taxable. Similarly, dividends earned from non-cooperatives units are taxable, however, those from cooperative setups are non-taxable.
Rent from other sources
The towers that are placed, the billboards or advertisements are done in your society bring income to the social fund. These amounts are considered as taxable amounts.
Parking on Rent
Households today have more than one 4-wheeler but one car parking space. Hence the need for taking parking on rent. Parking fees paid by non-residents to society are taxable but if a resident/member pays the same it is exempted.
Just like us, your society taxes must be paid on time. To ensure that all your deadlines and maintenance activity is on-time use ezeeServe. It is an app that makes society management easy. With the help of the app, you can discuss all issues related to taxes without being there. Furthermore, it also helps in tracking all income and expenses of the society.