Authored by CA. Lawanya Sridharan, MyGate
Central Goods and Services Tax is an indirect tax to be paid by end users for the consumption of goods and services. It was implemented in 2017 and it applies not just to individuals and corporations, but to housing societies as well, with exceptions, of course.
To understand in depth the correct eligibility criteria for a housing society’s liability towards GST, here’s a comprehensive guide which covers all essential information and facts you need to know about compliance with GST rules.
Definition and inclusion provision under the Act
| Act | Inclusions/Definitions |
| CGST Act 2017 Section 7 | “Supply” includes all forms of supply of goods or services or both such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business.” |
| CGST Act 2017 Section 7 And Section 2 (17 e) | States “business” as “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.” |
What are the registration requirements under GST?
As per Section 22, if the turnover of the housing society is over ₹20 lakh and/or it levies more than ₹20 lakh in aggregate annual maintenance charges in a financial year, it needs to take registration under GST laws and obtain a registration number, but the payment of GST depends on other parameters (covered below).
However, there are exceptions for Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand, where the threshold limit for registration liability is ₹10 lakh.
Criteria for applicable GST payment
- If the society’s monthly maintenance bill is more than ₹7500 per house, 18% GST is applicable on the entire amount.
- If a person owns more than one residence in a society, then a ‘separate’ ceiling of ₹7500 is considered as the second unit also gets individual exemption of ₹ 7500.
However, there is an exemption if the annual aggregate turnover of the housing society is not over ₹20 lakh.
Thus, for GST to apply, two criteria must be met.
| Annual turnover of a housing society | Monthly maintenance charge/per unit/per member | GST |
| ₹20 Lakh or less | ₹7500 or less | Exempt |
| ₹20 Lakh or less | More than ₹7500 | Exempt |
| More than ₹20 Lakh | ₹7500 or less | Exempt |
| More than ₹20 Lakh | More than ₹7500 | Applicable |
Furthermore, GST doesn’t apply on the difference amount alone. For example, if the monthly maintenance bill is ₹9000, GST will apply on the entire amount, not just on ₹1500.
Property Tax, Water Tax, Municipal Tax, Non-Agricultural Land Tax paid to the state are exempt from GST.
Sinking Fund, Maintenance and Repair Funds, Car Parking funds, Non-Occupancy Funds – all if collected as part of maintenance and not as deposits, interest from late payments, are not exempt from GST since they are considered charges collected by the society for the supply of services to members.
Input Tax Credit
Housing Societies will avail the benefits of ITC which means they will receive a tax deduction if they pay taxes on:
- Repair and and maintenance
- Capital Goods (generators, lawn furniture, water pumps, etc.)
- Other Goods (taps, pipes, hardware, construction materials)
However, for them to avail this benefit, the reverse charge mechanism will apply on all goods and services received by suppliers; the set-off can be claimed against the tax liability for maintenance funds. This benefit is available if the amount charged for these supplies is over ₹7500 per member.
A housing society can impart the benefits of Input Tax Credit by lowering the maintenance charges for members, the amount of which can be determined after proper cost analysis and comparison of output/input tax amounts against overall expenses and income.
Periodic Filing and Compliance Rules
A housing society has to file 37 returns, three returns per month which include:
- Billing Side – 11th of the following month
- Expense Side – 15th of the following month
- Consolidated Return – 20th of the following month
As well as
- One Annual Return GSTR 9 by the end of 31st December next year (for the year 2019-2020 by 31st December, 2020)
If a housing society deducts TDS, then they have to file GSTR7 by the 10th of the following month. Housing Societies do not fall under the Composition Scheme.
MC/RWA are expected to maintain proper records of all Supply and Expense reports for 72 months for auditing purposes.
Frequently Asked Questions
1. If a society’s monthly maintenance bill is over ₹7500 but the annual aggregate turnover is less than ₹20 lakh, does GST apply?
No
2. Do GST exemption of ₹7500 and ₹20 lakh turnover threshold apply even if the apartment is used for commercial purposes?
Yes. GST exemption and application applies to property used for commercial purposes.
3. Does a society have to pay GST to outside vendors for their services even if the society meets the exemption criteria?
Yes. If the vendor’s services fall under GST rules, the society has to pay as per the percentage applied. E.g., GST payable for contractor services.
4. If a person pays ₹5000 as monthly maintenance bill for owning one flat, and ₹8000 for another flat in the same society, how does GST apply?
In this case, GST applies only on the second apartment for which the maintenance is ₹8000.
5. How does this affect maintenance bill/other bill formats?
The society has to add GST to the monthly, quarterly, yearly invoice and mention the GSTIN No on all invoices where applicable.
6. What forms are to be used for monthly filing?
Monthly GST forms are GSTR 1, GSTR 2, GSTR 3.
7. On what repair and maintenance services is Input Tax Credit allowed?
On services such as lift AMC, Housekeeping, Security, Fire AMC, Contracting Staff, Accounting and Auditing Services, etc.
8. What should be excluded while calculating the limit of ₹7500?
Property tax, electricity charges collected from individual flat owners and other statutory levies are excluded.
9. What should be included while calculating the limit of ₹7500?
Water/electricity charges for common areas and common services like clubhouse, swimming pool, along with parking charges, common property tax, payments for repair and maintenance, security, admin, accounting, Non Occupancy charges.
10. Are share transfer fees/ interest on late payment included in the limit of ₹7500?
No. Share Transfer Fees are taxable but not included in the ₹7500 limit as no third party is involved. Similarly, interest on default is an individual charge, so it’s taxable, but not covered under the limit of ₹7500.
11. What if there are two co-owners for a single flat? How is the ₹7500 threshold applied here?
The ₹7500 threshold applies per flat irrespective of the number of owners for a single flat.
12. Should GST be collected from all members once the threshold of ₹20 Lakhs and ₹7500 both are crossed?
GST has to be collected only from those members, whose monthly maintenance charges exceed ₹7500 per month.
Same GST rules will apply to commercial society, industrial society, commercial and residential society and son?
When Housing Society is Raising bill to Members for reimbursement of Municipal Water Supply, GST is not applicable, Similarly if Society is raising Invoice for reimbursement of Capital Expenses incurred on New Water Connection (to improve water supply) , GST should not be applicable, Right ?
What if the maintenance is under 7500 but the interest thereon (due to non-payment of maintenance since long period), if included in maintenance, exceeds 7500? Would GST Stil be calculated on such bill? if Yes, then would GST be levied on the total amount OR only the interest amount?
Very useful article
Do we need to collect GST from COmmercials irrespective of their Monthly Mnt
In our society each flat has two agreements and we were making different maintenance bills for each agreement. Each agreement bill is less than 7500 but together it is more than 7500. Is it ok not to charge gst
Building constructed on BEST land and lease rent is payable to the BEST by the flat owner in the society. But the builder has not yet concluded the lease agreement with the BEST and the society. Then how it applies in determining the limit of Rs 7500 for applicability of GST in the maintenance bill.
Question on Filing of Returns.
Our RWA does not charge more than Rs. 7,500 per month per member, but has collection exceeding Rs.20 lakhs per annum. Hence, GST is not charged on maintenance invoice to members.
Do we need to file Returns and show the data related to Maintenance collections?
Note: We do have GST number and we do file Returns to show the amounts paid to vendors which includes GST they charge us.
Our society has GST No. We are filling Nil returns every quarter. We are paying GST to our 4-5 vendors as per there GST bills. But recently we found that though we are paying them GST amount to them, tthe bills are not reflecting in our GSTR2B or 2A. What should we do?
is it necessary to take gst invoice from contractor for any society expenses (for example lift repair, pest control and any other similar expenses)
Ours is a Housing Residents Welfare Association having 150 row houses. Our monthly maintenance charges are 1500/- pm. We are providing security services to the residents from a company.
1. Are we supposed to pay GST on the bill amount raised by the company, which is in the range of 70000/- pm?
2. How do we arrive at the annual turnover of the society to know whether we fall in the exemption category of below ₹20 lac per annum?
Your clarifications will help us in deciding a major difference we have in our minds regarding this issue.
My builder have charged 18% GST on advance payment of 18 months maintenance during handover of newly purchased flat. I need to know, is it correct? Still CHS is not formed.
Please advise.
The exemption of 7500per month per unit is available for RWA. When the builder is charging the maintenance he is a third party . He has rendered services and hence GST will be applicable on such maintenance charges collected by the builder. Note that the builder can collect maintenance charges only if the building has got OC.
Many societies are facing this issue and it need to be addressed by the Council . Housing societies going for major repairs and renovation has to collect extra contribution from its members. In such cases the contribution will exceed the GST limit of Rs 7500. In such cases in my opinion such societies can register in GST charge GST from the members , take the set off ITC for the expenses . Once all the work is done and the contribution amount comes below 7500 they can opt out of the scheme.
Writing in from Goa:
1. Are there any legal documents available online to quote these GST rules (to the society that I live in)
2. In goa the CHS by-laws state that the Non occupancy charges should ot exceed 5% of the rent…does that include the GST payable?
How does Housing Society collect Sinking Fund, Maintenance and Repair Funds,Non-Occupancy Funds as part of “deposits”,
This Q is based on your article on GST; whcih states that if collected as part of “Deposit”, these fees will not attract GST?
kindly explain and could you give an example, please! Many thanks!
Kidd regards
Pushpa
We have formed Co op Society and construction of 35 flats dine.while our contractor charged 18% on all his invoices raisesd by him.Our rate is finalized per sq ft including material and labour
FAQ 8) and 9) are conflicting each other, please advise whether Electricity Charges, Property Charges and Water will be included to calculate the threshold limit of Rs 7500/-
Our society needs to spend one time expense of ard Rs 50 lacs towards major repairs and for which separate contribution is being taken from each flat holder. This would lead to breach of Rs7500 per month as well Rs 20 lacs gross receipts. In such case, considering, it’s exceptional scenario, still as a society need to collect gst from its members? And whether we can approach to get any advance ruling ?
Our society is going to spend more than Rs.100,00,000/- towards RCC repairs incl.other repairs Paintings etc.per Structural report after 25years.for this purpose we are collecting repairs fund in monthly installments from members.Our Contractor is going to chargeGST@18% If society will have to register for GST & can avail ITC?
Many societies are facing this issue for such major repair works, Representations should be made,For conducting major repair works the contribution will exceed Rs 7500 per month per member. In my opinion, will be to register for GST get the input tax credit for all the expenses incurred for repair works. Once the repair is done the additional contribution will not be required . The society can reduce the contribution to less than Rs 7500 and opt out of GST.
My CHS has annual turnover of more than 20L but monthly Maint bill is less than 7500. Still it is Regd under GST.
1. Renomination fee is Rs 100. Is GST payable my member to CHS for the same?
2. As per table given above, gst is exempted for my CHS scenario. So should CHS levy GST on Car parking and other services including share txfer fee.?
Please share your opinion.
Thanks
Let me know housing co operative society is get any 80P deduction in income tax return AY 2020-21 . ( fd interest from co op bank and other bank )
Not sure if GST TDS applicable to housing society?the notification mentions societies established by Central or State govt or local authority.
I have filled in the comments and sent to you.
In Mumbai city, the members of the Housing Society have undertaken SELF DEVELOPMENT by the demolition of existing BUILDING.
i) The existing members are entitled for 30% increase in the carpet area of theflat.
ii) Members contribute to the Society at a certain rate to cover the expenses prior to receiving Commencement Certificate from Bombay Municipal Corporation.
iii) Some members wish to go for larger flats by paying the differential rate on the increased area.
iv) There are equal number of flats available sale in the proposed new building for the existing as well as outsiders.
Whether Society can avail of exemption on contribution by the existing members,
Seek clarification from GST masters on the above four points.
Useful information, well summarized.
1.Annual total Turnover up to 20 Lakh no GST registration reqd, therefore no GST even if contribution per member per month exceeds 7500.
2. No GST on single owner multi storied building or Bungalow even if maintenance expenses exceed 7500.
3. Therefore GST levy on CHS is unconstitutional as per Article 14.
4. ITC not available on capital expenditure for installing or replacing Lifts in the CHS building.