“Unravel the complexities of GST applicability for cooperative societies, including housing societies. Understand the legal framework, exemptions, and conditions. Learn about registration requirements, invoicing, and tax collection, ensuring compliance with GST laws for a seamless operation.”
A cooperative society is a society that has been registered under the Co-operative Societies Act of 1912 or any other applicable law in a specific state at the time of registration. These societies can take various forms, such as consumer cooperatives like Super Bazar and Apna Bazar, marketing cooperatives like Milk Cooperatives in Gujarat, Maha Grape, Cotton Marketing Co-ops, producer cooperatives like Indian Farmers Fertilizer Cooperative Limited (IFFCO), Horticultural Producers’ Cooperative Marketing and Processing Society (HOPCOMS), Indian Coffee House, and Amul. Additionally, there are worker cooperatives like India Coffee House, Kerla Dinesh Beedi, Shri Mahila Griha Udyog, Lijjat Papad, and Uralungal Labour Contract Cooperative Society. Purchasing cooperatives include organizations like the National Association of Educational Procurement, Retailer Owned Food Distributors and Associates, OMNIA Partners. Housing cooperatives, on the other hand, include societies like Kanungo Cooperative Group Housing Society Ltd in Patpar Ganj, Delhi, and Sainik Cooperative House Building Society Ltd in Bardez, Goa, among others.
According to Section 9 of the CGST Act, GST (Goods and Services Tax) is imposed on the supply of goods and services within a state, subject to the provisions and regulations specified. The taxable person, who is liable to be registered or already registered under the GST law, is responsible for paying this tax.
The term “person,” as defined in Section 2(17) of the CGST Act, includes various entities, such as an Association of Persons (AOP) or Body of Individuals (BOI), whether incorporated or not, in India or outside India, as well as a Cooperative Society registered under any Cooperative Society Law or a Society defined under the Societies Registration Act, 1860. Therefore, any society, regardless of whether it is involved in manufacturing, trading of goods, or providing services, falls under the purview of GST law.
The term ‘supply’ is not specifically defined under the GST law. However, the ‘scope of supply’ is provided u/s 7 of the CGST Act. Scope of Supply includes:
| Supply | |
|
Includes : |
Excludes: |
| a) All forms of supply of goods or services or both such
b) as sale, transfer, barter, exchange, licence, rental, lease or disposal
c) The activities specified in Schedule I, made or agreed to be made without a consideration d) The activities to be treated as supply of goods or supply of services as referred to in Schedule II |
e) The activities specified in Schedule III f) Notified goods and services
|
The term ‘business as per section 2(17) includes provision of the facilities or benefits, by a club, association, society, or any such body, to its members for a subscription or any other consideration. Thus, provision of any facility to members by the society is treated as business when any such supply is for a consideration/subscription.
| Business includes:
(a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit; (b) …….. (c) …….. (d) …….. (e) provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members; (f) admission, for a consideration, of persons to any premises; (g)…….. (h)…….. (i)…….. |
General Provision to Co-operative Societies
Under the GST Act of 2017, the applicability of GST is not dependent on whether an organization makes a profit or not. GST is applicable to all types of cooperative societies, similar to other forms of taxable persons as defined in Section 2(17) of the CGST Act, if they are engaged in business activities as defined in the same section.
Therefore, the general provisions of the GST Act apply to all types of cooperative societies, including housing cooperative societies. These provisions encompass registration requirements, tax liability, input tax credit, filing of returns, and compliance obligations, among others.
Exemption to Housing Societies
Cooperative societies, including Housing Cooperative Societies, are required to comply with the general provisions of GST law. However, in the case of Housing societies, specific exemptions are provided, which distinguish them from other cooperative societies in terms of GST requirements.
Exemptions are provided to housing society in respect of contribution made by the members of RWA vide Notification 12/17- CT dated 28.06.2017. As per this notification, Exemption was provided where such contribution did not exceed Rs. 5,000 per month per member. However, vide Notification No.2/18 dated 25.01.2018, the said limit of Rs. 5,000 was raised to Rs. 7,500 and further clarification was issued vide Circular No. 109/28/2019- GST dated 22.07.2019.
Sr.no.77 of Notification No.12/2017 dated 28.06.2017 provides for the following exemption to housing societies:
|
Table Sl. No. |
Chapter, Section, Heading, Group or Service Code (Tariff) | Description of Services | Rate (per cent.) | Condition |
| (1) | (2) | (3) | (4) | (5) |
| 1 | Chapter 99 | Services by an entity registered under section 12AA of the Income-tax Act, 1961 (43 of 1961) by way of charitable activities. | ||
| . | ||||
| 77 | Heading 9995 | Service by an unincorporated body or a non- profit entity registered under any law for the time being in force, to its own members by way of reimbursement of charges or share of contribution – (a) as a trade union; (b) for the provision of carrying out any activity which is exempt from the levy of Goods and service Tax; or (c) up to an amount of five thousand rupees per month per member for sourcing of goods or services from a third person for the common use of its members in a housing society or a residential complex. | Nil | Nil |
According to clause (c) mentioned above, if a housing society collects up to Rs. 7,500 per member per month for sourcing goods and services from a third person for the common use of its members, no GST is to be levied. However, if the society charges per day rent from a member for using its community hall, it would be liable to GST as it does not qualify as procuring goods or services for common use but rather specific to an individual member.
Regarding clause (b), any amount that is exempted from GST should not be considered. Therefore, property tax, electricity charges, etc., which are already exempt from GST, are not included in the Rs. 7,500 limit.
In cases where the contributions made to the Resident Welfare Association (RWA) exceed Rs. 7,500 per month per member, there has been a question regarding whether the RWA would still be eligible for the exemption or if the entire contribution received would be taxable under GST.
One petitioners “TVH Lumbini Square Owners Association” approached the Authority of advance ruling (TN/25/AAR/2019 DATED 21.06.2019) seeking clarification on this matter, Hon’ble Tamil Nadu AAR held adverse and stated that exemption is available if contribution is received up to INR 7,500. If contribution amount exceeds INR 7,500 then entitlement of exemption would stand defeated and GST will be levied on full amount of member contribution.
Inspired by such ruling, CBIC issued a clarification vide Circular No.109/28/2019-GST dated 22nd July, 2019 stating that exemption of contribution will be available only if amount is received up to INR 7,500. If an excess amount is received then the entire contribution would be liable to GST.
Aggrieved with the circular of CBIC and ruling of AAR, a petitioner filed a petition (W.P.No.27100 of 2019) before the Hon’ble Madras high court and challenged the order of Tamil Nadu AAR & Circular No 109/28/2019 dated 22nd July 2019 issued by CBIC in which it was stated that “in case of contribution by member to RWA is above Rs.7,500/- per month, then the entire amount would be taxable”.
while passing the judgment In the matter of ‘Greenwood Owners Association & others Vs Union of India Hon’ble High Court made following observations:
> In the case of Dilip Kumar, the Supreme Court reiterates the settled proposition that an Exemption Notification must be interpreted strictly.
> The plain words employed in Entry 77 being, upto an amount of 7,500/- can thus only be interpreted to state that any contribution in excess of the same would be liable to tax.
> The term ‘upto’ hardly needs to be defined and connotes an upper limit. It is interchangeable with the term ‘till’ and means that any amount till the ceiling of Rs.7,500/- would be exempt for the purposes of GST.
> HC ruled that the AAR as well as the Circular to the effect that any contribution above Rs.7,500/- would disentitle the RWA to exemption, is contrary to the express language of the Entry in question and both stand quashed. HC finally clarified that it is only contributions to RWA in excess of Rs. 7,500/- that would be taxable under GST Law.
It means that the amount up to Rs. 7,500/- would be exempt from the application of GST.
Conclusion
A Co-operative Housing Society or Residential Welfare Association who’s Turnover (collection money) crosses Rs 20 Lacs per annum would become liable for Registration under GST and should charge GST (CGST + SGST) from its members.
Registration Requirements in GST for Housing Societies and RWA
|
Sr.No |
Aggregate Turnover | Monthly Maintenance Fees per Member | Exemption from Registration |
| 1 | Less than 20 Lacs | Rs 7500 or less | Exempt |
| 2 | Less than 20 Lacs | Few Members- Rs 7500 or more & Few Member -7500 or less | Exempt |
| 3 | More than 20 Lacs | Rs 7500 or less | Exempt |
| 4 | More than 20 Lacs | Few Members Rs 7500 or more & Few Member 7500 or less | Not Exempt |
Once the Society becomes liable to pay GST, Society should mention the GSTIN No on its invoices and collect tax on the invoice issued . it would maintain books of accounts as required under GST and file periodic GST returns as well. it is allowed to take Input Tax Credit under Sec 16 (1) of CGST Act subject to conditions for taking input tax credit.
Housing Society is entitled to ITC in respect of taxes paid by them on capital goods (generators, water pumps, lawn furniture etc.), goods (taps, pipes, other sanitary/hardware fillings etc.) and input services such as repair and maintenance services – Lift AMC, Housekeeping, Security, Fire AMC, Repairs & Maintenance, Contract staff, Accounting & Auditing Services and other such services.
Reverse Charge as defined under Sec 2(98) of CGST Act also applicable to such society. Housing Society is not eligible for the Composition Scheme.
Author Bio
Its very good article to understand of common people of housing society members.