Corpus Fund Collected by Housing Society taxable under GST as It Is Advance for Future Services

In re Apartment Owners Association of Raj Lake View (GST AAR Karnataka)

GST Payable on Corpus Fund at Time of Collection Because It Is Advance Under GST Law;   ₹7,500 Monthly GST Exemption Not Available for Corpus Fund Because It Is Separate from Maintenance Charges;  Housing Society Corpus Fund Cannot Be Treated as Deposit Because It Represents Consideration for Services;  Corpus Fund and Maintenance Charges Treated Differently for GST Because Their Nature and Purpose Differ;  GST Liability on Housing Society Corpus Fund Arises on Receipt Because Time of Supply Is Payment Date;  Apartment Association Corpus Fund Contributions Taxable Because Members and Association Are Separate Persons.

The Karnataka Authority for Advance Ruling (AAR) examined an application filed by an apartment owners’ association registered under the Karnataka Societies Registration Act, 1960. The association manages the common affairs of a residential complex and maintains shared amenities for the benefit of its members. For this purpose, it collects monthly maintenance charges from members in accordance with the society’s bye-laws. These charges are used for recurring expenses such as salaries of security and housekeeping staff, maintenance of common areas like lobbies, staircases, elevators and parking spaces, and payment of utilities such as electricity and water used in common facilities. In addition to regular maintenance charges, the association proposed to collect corpus fund contributions from members to create a reserve for capital expenditure. These funds would be used for major repairs, repainting of the building, replacement of capital assets, structural repairs, or other long-term infrastructure improvements.