GST payable on maintenance charges
Real Estate

GST payable on maintenance charges

The finance ministry on July 22, 2019, had mentioned that a GST rate of 18 per cent applied to the flat owners if their monthly contribution to the residents’ welfare association (RWA) exceeded Rs 7,500.

With this background, a Nariman Point cooperative housing society (CHS) had filed an appeal against this order. But its efforts proved ineffectual as the GST Appellate authority for advance rulings, Maharashtra bench upheld the previous ruling and stated that GST has to be collected on the maintenance charges if it exceeds the threshold limit.

July 14 ruling of Authority for Advance Ruling (AAR) Maharashtra stated that activities of Nariman CHS towards its members were “taxable supplies” under the GST Act.

Various tax experts were not satisfied with this ruling as they did not think that these activities could be construed as ‘supply’ of services. Also, often certain tax scrutineer’s consider temporary tax cuts as a good fix in a downturn.

However, the Nariman CHS went on to highlight the point that it did not “supply” any service to its members. Also, in its appeal, the CHS had mentioned that AAR had failed to consider various judicial decisions especially that of the Supreme Court in 2009 case of Calcutta club which dealt with the ‘doctrine of mutuality’. This principle elucidates that the society and its members are not distinct entities further helping CHS in consolidating the point that CHS was not supplying any goods or services and henceforth does not come under the purview of GST.

But the appellate bench negated all these contentions and stated that the Supreme Court’s order was not applicable here as this order was relevant during the sales tax regime and the concept of supply has evolved to develop a wider meaning under the GST law.

To reiterate, the following conditions need to be satisfied for the application of GST on maintenance charges:
1. The aggregate of the charges levied by the society should exceed Rs 20 lakhs in a financial year and
2. The amount of the monthly maintenance charge for the particular flat or office should exceed Rs 7,500.

So, if the aggregate of maintenance charges levied by the housing society exceeds the threshold of Rs 20 lakhs in a financial year, it has to register itself under the GST laws and obtain a registration number.

Additionally, it is important to note that society does not have to levy GST on all the components billed in the invoice to the members. For example, the housing society cannot levy GST on charges which are in the nature of reimbursement of expenses is such that it is incurred by the society and recovered from its members such as various taxes and utility payments made by the housing society on behalf of the members. However, the housing society has to levy GST on the contribution made by the members towards the repairs funds.


The finance ministry on July 22, 2019, had mentioned that a GST rate of 18 per cent applied to the flat owners if their monthly contribution to the residents’ welfare association (RWA) exceeded Rs 7,500.With this background, a Nariman Point cooperative housing society (CHS) had filed an appeal against this order. But its efforts proved ineffectual as the GST Appellate authority for advance rulings, Maharashtra bench upheld the previous ruling and stated that GST has to be collected on the maintenance charges if it exceeds the threshold limit.July 14 ruling of Authority for Advance Ruling (AAR) Maharashtra stated that activities of Nariman CHS towards its members were “taxable supplies” under the GST Act.Various tax experts were not satisfied with this ruling as they did not think that these activities could be construed as ‘supply’ of services. Also, often certain tax scrutineer’s consider temporary tax cuts as a good fix in a downturn.However, the Nariman CHS went on to highlight the point that it did not “supply” any service to its members. Also, in its appeal, the CHS had mentioned that AAR had failed to consider various judicial decisions especially that of the Supreme Court in 2009 case of Calcutta club which dealt with the ‘doctrine of mutuality’. This principle elucidates that the society and its members are not distinct entities further helping CHS in consolidating the point that CHS was not supplying any goods or services and henceforth does not come under the purview of GST.But the appellate bench negated all these contentions and stated that the Supreme Court’s order was not applicable here as this order was relevant during the sales tax regime and the concept of supply has evolved to develop a wider meaning under the GST law.To reiterate, the following conditions need to be satisfied for the application of GST on maintenance charges:1. The aggregate of the charges levied by the society should exceed Rs 20 lakhs in a financial year and2. The amount of the monthly maintenance charge for the particular flat or office should exceed Rs 7,500.So, if the aggregate of maintenance charges levied by the housing society exceeds the threshold of Rs 20 lakhs in a financial year, it has to register itself under the GST laws and obtain a registration number.Additionally, it is important to note that society does not have to levy GST on all the components billed in the invoice to the members. For example, the housing society cannot levy GST on charges which are in the nature of reimbursement of expenses is such that it is incurred by the society and recovered from its members such as various taxes and utility payments made by the housing society on behalf of the members. However, the housing society has to levy GST on the contribution made by the members towards the repairs funds.

Next Story
Infrastructure Urban

InsideFPV Delivers ₹10 Crore Kamikaze Drone Order Under MoD’s EPR Route

InsideFPV, a Surat-based drone technology manufacturer, has successfully executed a ₹10 crore defence contract to supply indigenous kamikaze drones under the Ministry of Defence’s Emergency Procurement Route (EPR). The company completed the delivery of hundreds of FPV kamikaze drone platforms within a rapid two-month timeframe, highlighting its ability to meet urgent military procurement timelines.The supply orders were fulfilled under the emergency procurement mechanism, which is aimed at fast-tracking acquisitions for immediate operational needs. InsideFPV’s quick execution reflects it..

Next Story
Infrastructure Energy

Vedanta Resources Secures Fitch Upgrade to ‘BB-’, Best Rating Since 2015

Vedanta Resources Limited (VRL), a global player in metals, oil & gas, critical minerals, power and technology, has received a credit rating upgrade from Fitch Ratings, marking its strongest bond rating in over a decade.Fitch has raised Vedanta Resources’ Long-Term Foreign-Currency Issuer Default Rating (IDR) to ‘BB-’ from ‘B+’, while maintaining a Stable Outlook. The agency also upgraded VRL’s senior unsecured rating, along with the ratings of US dollar-denominated bonds issued by Vedanta Resources Finance II Plc and guaranteed by VRL, to ‘BB-’.The upgrade represents Vedan..

Next Story
Real Estate

NAREDCO NextGen NCR Chapter Launched

The NAREDCO NextGen NCR Chapter was recently launched at Excelerate 2026 in Mumbai, marking a key step towards integrating emerging real estate leaders from the National Capital Region with the national platform. The initiative aims to promote sustainable and responsible urban development through collaboration and knowledge exchange.The event brought together young developers, entrepreneurs, and professionals from across NCR, including Noida, Gurugram, Ghaziabad, Faridabad, Bhiwadi, and Meerut. Discussions focused on urban development, finance, sustainability, innovation, and policy, emphasisi..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement