Housing maintenance up to Rs 5,000 will not attract GST
Dated Mumbai, September 8, 2017
Mumbai: No Goods and Services Tax (GST) on housing society maintenance up to Rs 5,000, said the Tax Research Unit, Ministry of Finance (MoF).
In the form of Frequently Asked Questions (FAQs), in a detailed explanatory letter, the ministry has clarified that the maintenance charges, paid to the co-operative housing society (CHS), will not attract any GST, if the amount is Rs 5,000 or less per month, according to a TOI report.
"Reimbursement of charges or share of contribution up to an amount of Rs 5,000 per month per member, for sourcing of goods or services from a third person for common use, is not liable to GST,” the note stated.
Housing society maintenance charges include security fees; lift maintenance, maintenance of common areas etc.
However, in upscale societies, where you have a club, swimming pool, gymnasium, the maintenance charges are usually high. The annual collection of such societies is typically in the Rs 20 lakh bracket. So, these societies will continue to attract GST.
Also, the ministry has clarified queries related to charges collected by CHS such as property or water tax.
"Services provided by government or local authorities to persons other than business entities are exempt from GST." Thus, if property tax or water tax is collected by the CHS on behalf of the MCGM from individual flat owners then GST is not chargeable. Similarly, GST is not chargeable on non-agricultural tax or electricity charges collected under other statutes from individual owners. The FAQs add: "Sinking fund, repairs & maintenance fund, car parking charges, non-occupancy charges, or simple interest for late payment of dues owed to a CHS will attract GST as these are collected for the supply of services meant for members,” the FAQ stated.
However, many of the CHS related points in the FAQs are Mumbai-base, but these illustrations will be applicable to any CHS across the country.
However, if you are paying more than Rs 5,000 per year as maintenance charge, but the net amount is less than Rs 20,00,000 lakh per year, the society will not have to register under GST.
According to Yusuf Hakim, indirect tax partner at CNK & Associates, smaller societies with lower annual revenue are likely to be out of the single tax regime.
"In the past, courts have consistently held that no service tax can be levied on various charges collected by a CHS from its members, based on the principle of mutuality. This principle means that the society provides services to itself, which cannot be taxed. This issue is pending at the Supreme Court.” Hakim as quoted as saying.