Applicability of GST for Housing society and available exemption

As per sec7(1) (aa) of cgst act2017, the activities or transactions, by a person, other than an individual, to its members or constituents or vice-versa, for cash, deferred payment or other valuable consideration will be treated as “supply”

Applicability: Applicability of Gst we can classify into two different ways, where Society is maintained by RWA (Resident Welfare Association) and builder.

let’s understand its applicability a builder will form the society maintenance committee through conveyance deed for society maintenance this committee called as society committee or RWA.

 Case1: if housing society is maintained by RWA (Resident Welfare Association).

In this case, housing society is charging monthly subscription/contribution above ₹7500 per flat per month then the individual is liable to pay the GST @18%. Here ₹7500 is consider as threshold if total amount exceeds threshold limit, then whole amount is taxable and not a differential amount.

Earlier, threshold limit for housing society was ₹5000 but now it will be ₹7500

For charging GST there are more 2 criteria i.e. GST registered entity and contribution.

*contribution/ subscription per flat per month

Clarification: 

Here, a question is arisen that on which amount GST is calculated?

Let’s understand through an example.

For e.g. If society maintenance charges are ₹9000 then GST is applicable on ₹9000 and not-on differential amount i.e. ₹1500(₹9000-₹7500). So, the total value of GST will be ₹1620.

Case2: When maintenance charges are paid to builder.

If you are paying maintenance charges to builder then you need to pay the GST on whole amount @18% without any threshold limit. You need to pay GST even if you pay ₹1.

 Eligibility of ITC:

RWA/builder are entitled to take ITC of GST 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. For reduction in tax while filling GSTR 3b.

Exemption:

Eligibility for exemption:

in case if turnover is more than ₹20L and contribution per flat per month is not exceed ₹7500 then Exemption is available.

• If annual turnover is less than ₹20L then irrespective of contribution Exemption is available.
• If annual turnover is more than ₹20L and contribution is less than ₹7500

For e.g. If the contribution per flat per month is₹7500 per month then GST is not applicable. But if your contribution is ₹7501 then GST will be applicable on whole amount.

CASE SCENATIO: If a member has 2 flats in a society and contribution per flat is ₹7500. His contribution will be ₹15000 in such case, whether GST is applicable?

The answer is NO this threshold limit is for per flat per month.

So, member is eligible for exemption.

For more clarification: https://taxguru.in/goods-and-service-tax/gst-contribution-charged-residential-welfare-association.html