Club or Association Service [Section 65(105)(zzze)]

[Jiten Patel]

Services provided by a club or association to its members are already subject to tax since 2005.

Now with the amended definition Services provided to Non-members to use their facilities in their own capacity for a separate charge is brought to tax net.

Issue : if Movie Ticket is booked in Portal by any Employee, amount of Ticket is shown as recovery in Salary of the Employee under the head  CLUB MEMBER SHIP FEES,

RQST TO KINDLY ADVICE RECOVERY / REIMBURSEMENT CHARGES WILL FORM PART OF TAXABLE SERVICE ?

[Rama Krishana]

IT is the arrangement between the employer and service provider (portal) would help to determine the real nature of service. Mere nomenclature "Club Membership Fees" for booking of movie ticket is raising some doubt about the arrangement and difficult to say anything.

Recovery / reimbursement of expenses are part of taxable service and liable to taxed if the main service is otherwise taxable.

AI Summary

Club or Association Service expanded to include non-member facility charges; reimbursements treated as taxable when main service is taxable. Scope of Club or Association Service now includes non-member facility charges. The tax character of movie-ticket bookings recharged to an employee labelled as 'club membership fees' depends on the factual arrangement between employer and service provider. Labelling alone does not determine taxability. Recoveries or reimbursements form part of taxable consideration and are liable to service tax where the principal service is taxable; if the underlying supply falls within Club or Association Service, the recharged amount is taxable.