As per S. No 77 Of exemption notification No. 12/2017 dated- CT (Rate) as amended up to 14.11.2017 exemption has been granted to 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 –
(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.
In the context of an Association, whether or not registered, collecting contribution for common maintenance of the colony or a cluster of accommodations / plots, the exemption is available for two type of reimbursements (such association is referred here in after as “ Owners’ Association”) :-
- Toward reimbursement of receipt of Supply of goods and/or services which are exempted from GST, and
- Toward reimbursement of receipt of Supply of goods and/or services other than above which are not exempted and received from third person where such reimbursement does not exceed Rs. 5,000.00 per month per member. (this is now being increased to Rs. 7,500.00 as per decision of GST council meeting dated 18.01.2018)
In view of the above, for example, any contribution received by the Owners’ Association toward reimbursement of the following shall not be included for purpose of calculating threshold limit of Rs. 5,000.00 per month.
1. Rent from members for community hall or other space in the common premises as this is a supply of service by the Owners’ Association not from third person,
2. Rent from members for any movable property such as tents, books, crockery & cutlery etc. as this is a supply of service by the Owners’ Association not from third person,
3. Water charges paid for Municipal water or from other private supplier as the Supply of water is exempted from GST,
4. Supply of electricity to common area and the members as the Supply and distribution of Electricity is exempted from GST,
5. Supply of diesel or other petroleum products as these products are not subjected to GST,
6. Supply of Electricity Generated in house by the Owners’ Association as no third party is involved.
Apart from the above reimbursement of the salary of the persons directly employed by the Owners’ Association for any purpose related to the maintenance, security, collection and disposal of Garbage, collection and accounting etc. shall also not form of the part of Rs. 5,000/- thresh hold limit.
Prepared by CA Suresh Chand Jain