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
Real Estate

Dharavi Rising

Dharavi, Asia’s largest informal settlement, stands on the cusp of a historic transformation. With an ambitious urban renewal project finally taking shape, millions of residents are looking ahead with hope. But delivering a project of this scale brings immense challenges – from land acquisition to rehabilitate ineligible residents outside Dharavi and rehabilitation to infrastructure development. It also requires balancing commercial goals with deep-rooted social impact. At the helm is SVR Srinivas, IAS, CEO & Officer on Special Duty, Dharavi Redevelopment Project (DRP), Government..

Next Story
Real Estate

MLDL Records 20.4% Growth in Pre-Sales

Mahindra Lifespace Developers Limited (MLDL), the real estate and infrastructure development arm of the Mahindra Group, announced its financial results for the quarter ended March 31, 2025. In line with INDAS 115, the company recognises revenues using the completion of contract method. Key highlights FY25: Consolidated sales (Residential and IC&IC) of Rs 32.99 billion. Gross development value (GDV) additions in FY25 were Rs 1.81 trillion compared to Rs 440 billion in FY24 (~4x growth). Residential pre-sales of Rs 28.04 billion in FY25, reflecting 20.4% growth o..

Next Story
Infrastructure Transport

UCSL Delivers India's First Green Cargo Vessel to Norway

In a landmark achievement for Indian shipbuilding and the Atma Nirbhar Bharat initiative, Udupi Cochin Shipyard Limited (UCSL), a subsidiary of Cochin Shipyard Limited (CSL), has delivered the first of six next-generation green cargo vessels to Norway-based Wilson Ship Management AS, Europe’s largest short-sea shipping operator. The 3,800 DWT vessel, named Wilson Eco 1, was handed over during a ceremony at New Mangalore Port. The delivery is part of a Rs 5.06 billion project supported by Norway’s green maritime funding programme, marking India's entry into the European eco-friendly ca..

Advertisement

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Advertisement

Talk to us?