A housing society is an association, whose object is to provide its members common amenities and services. Simply put these are a collective body of persons, who stay in a residential society as a collective body, they would be supplying certain services to its members, be it collecting statutory dues from its members and remitting to statutory authorities, maintenance of the building, security etc. These societies are either called Apartment Owner Association (AOA) or Resident Welfare Association (RWA). As per section 2(17) of the CGST Act, 2019 a club, association, society or any such body (for a subscription or any other consideration) of facilities or benefits to its members is deemed to be a business and the activities of the housing societies like apartment owner associations and resident welfare association also attracts the GST and such societies are also liable to be registered under the GST law. But even after the clarifications provided by the GST Authority there have been multiple issues raised regarding the GST implication on such apartment owner associations and resident welfare association.
Any apartment owner association or resident welfare association may take a note of the following –
- The supply of services by any apartment owner association or resident welfare association which is (unincorporated body or registered under any law) to its own members by way of reimbursement of charges or share of contribution (monthly maintenance) up to an amount of Rs. 7500 per month per member for providing services and goods for the common use of its members in a housing society or a residential complex are exempt from GST.
- Any apartment owner association or resident welfare association shall be required to pay GST on monthly subscription/ contribution charged from its members, only if such subscription is more than Rs. 7500/- per month per member and the annual aggregate turnover by way of supplying of services and goods is also Rs. 20 lakhs or more.
- If aggregate turnover of an apartment owner association or resident welfare association does not exceed Rs.20 Lakh in a financial year, it shall not be required to take registration and pay GST even if the amount of maintenance charges exceeds Rs. 7500/- per month per member.
- The apartment owner association or resident welfare association are entitled to take ITC of GST paid by them on capital goods (generators, water pumps, lawn furniture etc.), goods (taps, pipes, other sanitary/hardware fillings etc.) and input services such as repair and maintenance services.
- As per general business sense, a person who owns two or more residential apartments in a housing society or a residential complex shall normally be a member of the RWA for each residential apartment owned by him separately. The ceiling of Rs. 7500/- per month per member shall be applied separately for each residential apartment owned by him. For example, if a person owns two residential apartments in a residential complex and pays Rs. 15000/- per month as maintenance charges towards maintenance of each apartment to the RWA (Rs. 7500/- per month in respect of each residential apartment), the exemption from GST shall be available to each apartment
- The GST payable on maintenance charges by residents in case the charges exceed Rs. 7500/- per month per is 18% i.e., if the maintenance charges are Rs. 9000/- per month per member, GST @18% shall be payable on the entire amount of Rs. 9000/- and not on [Rs. 9000 – Rs. 7500] = Rs. 1500/- .
- Services provided by the Central Government, State Government, Union territory or local authority to a person other than business entity, is exempted from GST. So, Property Tax, Water Tax, if collected by the RWA/Co-operative Society on behalf of the MCGM from individual flat owners, then GST is not leviable.
- GST is not leviable on Non-Agricultural Tax, Electricity Charges etc, which are collected under other statutes from individual flat owners. However, if these charges are collected by the Society for generation of electricity by Society’s generator or to provide drinking water facility or any other service, then such charges collected by the society are liable to GST.
Conclusion
The taxation is becoming a major part in our day to day lives. It becomes necessary for every person who is a member of such apartment owner association or resident welfare association or deals with apartment owner association or resident welfare association on daily basis to be aware about these GST charges to protect themselves from future liabilities.
References
- Directorate General of Taxpayer Services, Central Board of Indirect Taxes and Costumes, “GST on Housing Societies”, available at: GST_ON_Cooperative_housing_Societies0509.pdf;jsessionid=A6BB833711E08C62E4F445120048FD40 (cbic.gov.in)
- Government of India, Ministry of Finance, “Issues Related to GST on monthly subscription charged by Resident Welfare Association”, available at: Microsoft Word – Draft RWA circular.docx (cbic.gov.in)
