Tax rate of resident welfare association

RWAs arw treated as AOP (Association of Person) as per Income Tax Law.

As per Section 167B of Income Tax act-

1. If individual share of Member is unknown - AOP taxed at MMR, but if any member's income is chargeable more than MMR, then such higher rate

2. If share of members is known-

a. If any member's income exceeds the amount of basic exemption limit then charged at MMR

b. If higher rate applicable on any member - Then Member's share taxed at Such higher rate and rest of the amount at MMR

c. If all the members have total income Below the Basic Exemption limit then taxed at Slab rate.

Dear Sir,

If the share of members are indeterminate and any of the member has taxable income then maximum marginal rate @30% otherwise slab rate of individuals. Also check whether RWA is also registered under societies Act.

Hi,

As per Sec. 2(31) of Income Tax Act, 1961, RWA falls under the category of "Association of Persons". The criteria for AOP is that it is a body of individual which come together to carry out/ meet a common objective.

Generally, the contributions from members of AOP to the AOP are not taxable because of the concept of "mutality" i.e. one person cannot make income from himself/ herself. As such the contributions received by RWA from its members are not taxable at all.

However, interest earned from the deposits made from the money received from members is taxable in the hands of RWA.

Tax slabs applicable to an RWA/ AOP for AY 2017-18 are as below:

0-10,000 (10%)

10,000-20,000 (20%)

Above 20,000 (30%)

Add Cess and Surcharge to above (Surcharge if income>1 Crore)

You should use the form ITR-5 for filing of your return.

Regards,

It is immaterial whether it is registered or not. However, it is advisable to get it registered for better assesments, bank works and other tasks. Income Tax laws don't require registration for the purpose of taxation.

Whatever is contributed by members for common welfare or achievement of common objectives shall be treated as tax free. If members pay by area they occupy i.e. sq. ft. basis, the same shall also be exempt.

However, interest earned on any of the deposits shall be taxable as it will be from outside party.

If the bye laws of the RWA says members are not entitled for any surplus apply individual slab rate. If bye laws are silent apply maximum marginal rate.

167B is applicable on societies registered for business objects, not charitable or AOP or BOI

In your case RWA is not registered under any societies Act therefore question of members share arises.

Share is determinable generally in case of RWA.

If your society is registered under Societies Registration Act,1860 then it will be taxed as per the Slab rate.

RWA (whether registered or not) , is categorized as Association of Persons (AOP) Under Income Tax Law. so Tax slab of individual will apply .

As per my view sec 167b of Income Tax Act, not applicable on RWA.

Hi,

For tax purposes RWA is cinsidered as sn AOP and the normal individual tax rates should apply.

Regards,

Nikhil.