GST Applicability on Registration Fee & Audit Fee of Co-operative Societies

Abstract

This article analyses the applicability of Goods and Services Tax (GST) on fees collected by Government departments, particularly the Registrar of Co-operative Societies, in connection with registration and statutory audit of co-operative societies. It examines in detail the relevant provisions of the CGST Act, 2017 and the applicable notifications — Notification No. 12/2017–Central Tax (Rate) (exemptions) and Notification No. 13/2017–Central Tax (Rate) (reverse charge) — and sets out the specific circumstances in which such fees are exempt or taxable.

1. Legal Framework

The Department of Co-operation of each State, through the Registrar of Co-operative Societies, performs statutory functions such as:

• Registration of co-operative societies, and
• Conduct of statutory audits of co-operative institutions.

Fees charged for these purposes are prescribed under the respective State Co-operative Societies Acts or Rules. Under GST, taxability depends on whether the service is treated as a sovereign function or a supply of service, and on applicable exemptions notified by the Central Government.

2. Audit Fee (for statutory audit of Co-operative Societies)

 Nature of the Activity

• Audit is performed by the Registrar (or authorised auditor) as per provisions of the Co-operative Societies Act.
• Although it is statutory, the recipient (the society) is a “business entity” under Section 2(17) of the CGST Act.
• The fee is generally consideration for audit service rendered to the society, not a levy for “registration/testing/certification.”

 Notification Reference

• Entry 6 of Notification 12/2017-CT (Rate) states (Chapter 99):

“Services by the Central Government, State Government, Union territory or local authority except the following services  

(a) services by the Department of Posts by way of speed post, express parcel post, life insurance, and agency services provided to a person other than the Central Government, State Government or Union territory;

(b) services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport;

(c) transport of goods or passengers;

(d) any service, other than services covered under entries (a) to (c) above, provided to business  entities.”

• Because audit of a co-operative society does not fall under sub-clauses (a)–(c) and the recipient is a business entity, the general exemption in Entry 6 does not apply.

♦ Conclusion for Audit Fee

• Audit service ≠ registration / certification.
• Provided by Government to a business entity.
• Hence, GST is applicable on statutory audit fee collected by the Co-operative Department from co-operative societies, unless a specific State-level exemption exists

3. Registration Fee (for Co-operative Society Registration)

➤ Nature of the Activity

• The Registrar of Co-operative Societies registers a society under statutory mandate of the State Co-operative Societies Act.
• The fee is prescribed by law (a statutory levy) and is for “registration required under law.”

➤ Applicable Notification Entry

• Entry 47(a) of Notification No. 12/2017-CT (Rate), dated 28-06-2017, reads:

“Services provided by the Central Government, State Government, Union territory or local authority by way of –

(a) registration required under any law for the time being in force;

(b) testing, calibration, safety check or certification relating to protection or safety of  workers, consumers or public at large, including fire licence, required under any law for the time being in force.”

Conclusion for Registration Fee

• Registration of a co-operative society falls exactly under clause (a).
• Therefore, GST is not applicable on the registration fee collected by the Registrar/ Governm ent.

 4. GST Exemption Based on Turnover (Entry 7 of Notification No. 12/2017)

Under Entry 7 of Notification No. 12/2017 – Central Tax (Rate),services provided by the Central Government, State Government, Union territory or a local authority to a business entity are exempt from GST if the aggregate turnover of that entity in the preceding financial year does not exceed ₹ 20 lakh (₹ 10 lakh in special-category States).

The exemption does not apply to:

• Postal services (speed/express post, insurance, agency),
• Aircraft or vessel-related services,
• Transport of goods or passengers,
• Renting of immovable property.

Since audit service is not one of the excluded categories, statutory audit fees collected by the Registrar of Co-operative Societies are exempt from GST if the society’s turnover in the previous year does not exceed ₹ 20 lakh (₹ 10 lakh in special States).If the turnover exceeds this limit, the exemption is not available, and the society must pay GST under Reverse Charge Mechanism (RCM) as per Entry 5 of Notification 13/2017

5. GST Exemption on Audit Fees up to ₹ 5,000 – Entry 9 of Notification 12/2017

 Under Entry 9 of Notification No. 12/2017 – Central Tax (Rate),services provided by the Government or local authority are exempt from GST where the consideration charged does not exceed ₹ 5,000, except for certain excluded categories (postal, aircraft/vessel, or transport services).

Accordingly, when the Registrar of Co-operative Societies collects an audit fee up to ₹ 5,000 per society in a financial year, such audit service is exempt from GST.

However, when the audit fee exceeds ₹ 5,000, the exemption under Entry 9 ceases to apply, and GST liability arises under reverse charge (Entry 5 of Notification 13/2017) if the recipient society’s turnover exceeds ₹ 20 lakh (₹ 10 lakh in special-category States).

6. Summary

7. Conclusion

The statutory audit and registration functions performed by the Co-operative Department are primarily regulatory. While registration fees are unconditionally exempt, audit fees enjoy exemptions based on either value or turnover thresholds. Only when those thresholds are crossed does GST arise, payable by the society under reverse charge.

This structure ensures that smaller co-operative societies are relieved from compliance burdens while larger entities contribute tax in proportion to their operations.

Disclaimer:

The above views are based on my personal understanding and interpretation of the provisions of the GST law, including relevant notifications. Readers are advised to verify the facts and refer to the GST Act, Rules, official circulars, and notifications issued by the Government or CBIC for authoritative guidance before taking any decision or action.