Accounting is one main part in the housing societies. It is different than business accounts. In business accounts generally focus to increase the turnover of the company and monitoring sales growth as target. But in housing societies only maintenance collection is the source of income. Secondly Flat transfer amount, rent from advertisement or mobile tower if available then it will consider as income.
- Collection of the funds
- As per decided frequency by General Body Members maintenance amount is collecting by all members.
- Maintenance (Service) Fund – Equally divided by number of the flats which society can be use to fulfill the requirement of all general expenses including salaries, utilities payments, small repairs, Lift AMC, Fire Fighting & other operating expenses.
- Repair Fund – It is 0.75% p.a. of construction cost of each flat at the time of construction of the building.
- Sinking Fund – It is 0.25% p.a. of construction cost of each flat at the time of construction of the building.
- Education Cess & N.A. Tax
- Insurance Charges (At actual of Insurance premium and same divided in all units)
- NOC Charges (10% of service charges)
- Property and Water Charges – At actual
- Parking Charges – as decided by General Body
- Interest on outstanding of the maintenance – 21% p.a. of maintenance amount
- Contribution
- Charges Area wise
- Property Tax
- Repair Fund
- Major Repair Fund
- Sinking Fund
- Painting Fund
- Insurance Charges
- N.A. Tax.
2. As Decided by Gen. Body
- Parking Charges.
- Flat Transfer Premium
3. Charges Unit wise /Equally
- Water Charges (as per BMC)
- Common Electricity Charges
- Expenses on Lift
- Security Charges
- All Service Charges
- Lease Rent
- Educational Training Fund. Education Fund.
- Accounting & Auditing Charges
Income sources of the society
- Maintenance Collection
- Interest on the fixed deposits
- Society transfer premium
- Income from advertisement (if available)
- Income from mobile tower (if available)
- Rent from society compound area ( if society giving to the members for personal functions)
PAN & TAN Number is for taxation
PAN number
As it is a tax entity under the income tax laws, it needs to have a Permanent Account Number (PAN), even for opening a bank account.
TAN Number (Tax Deduction Account Number)
This number is issued by the Income-tax Department. TAN is to be obtained by all persons who are responsible for deducting tax at source (TDS) and every society is eligible to pay income tax per year after getting the TAN number.
TDS Deduction
In the housing societies there are only 2 main services which are eligible to deduct the TDS.
- Contractors (194C) – Lift Maintenance, Fire Fighting, Repairing Services, Security Services & Other maintenance these are the contractors therefore 1% TDS for Proprietorship and 2% TDS for Partner ship services firms.
- Professional Services (194J) – C.A., Legal Services, Consultant etc. these are the professional services therefore 10% TDS for professional firms.
- After lockdown TDS rates has been reduced by 25% therefore the revised rates applicable for the period 14 May 2020 to 31.03.2021 which are –
- 0.75% – for proprietorship contractor firms
- 1.5% – Partnership contractor firms
- 7.5% – Professional Services
Note – TDS Return has to be filed after completion of the quarter.
Petty Cash
Limit for cash on Hand limit
Not exceeding Rs. 5,000 (Rupees Five Thousand only),for petty expenses. If due to unavoidable circumstances, the cash in hand has exceeded the above limit, the excess cash shall be credited into the bank within the next three days by the Secretary or any other person authorized by the Committee to keep cash in hand.
Payment beyond certain Limit by Cheques
All payments in excess of Rs.1500/- (Rupees Fifteen Hundred) shall be made by means of crossed a/c payee cheques.
- Petty cash voucher to be made for each entry and even petty cash register is compulsory for housing societies.
GST
- If society’s aggregate turnover is greater by 20 lac per year, if less by 20 lac has having other source of incomes, they are eligible to take GST number & file the return every month. (For details kindly refer our video & blog on the GST implication in the housing societies)
Account Ledgers
- Member Ledgers – Societies all activities is depending on the quorum for each unit is very important, individual member ledger is compulsory whether the member is having multiple unit in the same society.
- General Ledgers – Repairing & maintenance, utilities payments, other payments, staff salaries, festival expenses etc. these all comes under General Ledgers and to be maintaining separately with the record reference.
- Bank Book – Society is having multiple bank account, bank reconciliation for each bank separate bank books need to be maintained.
Finalization of Accounts
Within 45 days of the close of every co-operative year, the Secretary of the Society or any other person, authorised by the Committee in that behalf, shall finalize the accounts of the preceding co-operative year, prepare the Receipts and Payments Statement, the Income and Expenditure Statement for the said year and the Balance Sheet as at the close of the said year in the forms prescribed under Rule 62(i) of MCS Rules 1961 along with the list of Active Members and Non-Active Members as at the close of the preceding co-operative year, with amounts to their credit in the share capital account and deposits, if any, the schedules of investments, the debtors, the creditors, the furniture, the fixtures and the office equipments etc.
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