Here’s all you need to know about GST implications on the maintenance charges of housing societies.
A lot of assumptions are doing the rounds these days in terms of GST implications in the maintenance charges of housing societies. While most do not understand the technical aspects, there are many who are trying to gain out of this situation. Recently, a developer was accused of charging GST from the residents of one of his housing projects, even when the monthly maintenance charges were less than Rs 5,000 per month.
Providing clarity on the GST charges for housing societies, Sachin Menon, Partner and Head, Indirect Tax at KPMG in India, says, “If the monthly maintenance charges per household are below 5,000, then such supply of service by society to its member will be exempt from GST even if the overall annual collection of the society is more than 20 lakh. Further, in cases where such monthly maintenance charges exceed the value of 5,000 per month per member, and the annual collection is less than 20 lakh, then too such supplies would be exempted from GST. Also, GST on maintenance charges is not affected by the carpet area of the housing unit.”
One thing to note in this case is that if the society is not registered, and the developer is providing maintenance services to the residents in independent capacity and not as an association of members, then the aforementioned exemption would not be available. In the GST era, it appears that any unregistered dealer purchase made by any cooperative housing society will attract GST on a Reverse Charge Mechanism (RCM) basis. This means that the liability to pay tax is upon the receiver and not the seller. This means that the home-owners will have to bear GST charges on all maintenance costs.
So, if your developer is also charging you GST on maintenance charges while you are paying less than 5,000 a month, it is time to investigate other aspects and then take up the case with your developer.