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.

Related Stories

Gold Stories

Next Story
Infrastructure Urban

Vedanta Metal Bazaar Expands to Global Markets

Vedanta Aluminium has expanded its digital e-commerce platform, Vedanta Metal Bazaar, to international markets, enabling overseas customers to order and purchase aluminium products online.The platform will now be available to buyers across Asia, Europe, Africa and the Americas, providing a digital gateway for export transactions with 24x7 access.In FY26, Vedanta Metal Bazaar processed transactions worth nearly $4.1 billion, or over Rs 380 billion, and fulfilled more than 23,000 orders. The platform is also used regularly by more than 550 MSMEs in India alongside large OEM customers.The export ..

Next Story
Infrastructure Urban

Ramky Infrastructure Q1 FY27 Revenue Rises 24.3%

Ramky Infrastructure Limited reported a 24.3% year-on-year increase in consolidated revenue from operations to Rs 471.2 crore for Q1 FY27, compared with Rs 3.79 billion in the corresponding quarter of FY26.Standalone revenue from operations rose 27.5% YoY to Rs 4.51 billion from Rs 3.54 billion, while total standalone income increased 35% to Rs 5.32 billion.Consolidated profit before tax stood at Rs 540.9 million during the quarter. The company highlighted a sharp sequential improvement compared with a pre-exceptional loss of Rs 190.1 million in Q4 FY26.Two of the three projects awarded during..

Next Story
Technology

LTTS Launches AgenticIQ AI Platform for Engineering

L&T Technology Services (LTTS) has launched AgenticIQ, an end-to-end agentic AI platform designed for engineering and manufacturing organisations.The platform is aimed at helping enterprises move beyond isolated AI pilots by enabling autonomous, multi-agent workflows across engineering, product development, manufacturing, industrial operations and customer experience.AgenticIQ is built on LTTS’ Engineering Intelligence portfolio and converts existing engineering capabilities into specialised, reusable AI agents. Its planning-first architecture is embedded into engineering and production ..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement