Free membership by club

[Mukund Honkan]

If certain club offer free membership to persons at repute to promote its membership what are the income tax & service tax implications on club

[DR.MARIAPPAN GOVINDARAJAN]

If your club is by means of mutuality there will be no liability of service tax either free membership or by paying entrance fee. If the club is proprietary service tax is liable. In respect of income tax if no income is received there would be no liability for income tax, in my opinion.

AI Summary

Clarifying Tax Implications: Free Club Memberships and Service Tax Liability Based on Mutuality or Proprietary Status. A discussion on a forum addresses the tax implications for a club offering free memberships to reputable individuals. The response indicates that if the club operates on a mutuality basis, there is no service tax liability, whether the membership is free or involves an entrance fee. However, if the club is proprietary, service tax applies. Regarding income tax, there is no liability if no income is received from the memberships.