Resident welfare associations are formed to look after day-to-day management and maintenance of a building or locality. Their main source of income is levy of service charges from the members. This budget has expanded the scope of service tax. The Finance Minister has proposed to levy service tax on residents' welfare associations whose members contribute more than Rs 3,000. There has been no change in service tax rate. The rate remains same as before - 12.24 percent.
With the mushrooming growth of high-end apartments, and the associated high costs, the maintenance of these apartments is a regular task. So the associations are formed to look after the maintenance and service aspects of the society. They are formed out of the residents of the society. Any person who is the resident of that area/apartment has the right to become a member of the association