GST on Residential Societies’ Maintenance Charges: A Professional Analysis.

[YAGAY andSUN]

Below is a professionally crafted article on the GST implications on maintenance charges levied by residential housing societies, complete with a structured format and clarity for stakeholders such as residents, housing society managers, and tax professionals.

Introduction

With the rollout of the Goods and Services Tax (GST) in India on 1st July 2017, residential housing societies (commonly known as Resident Welfare Associations or RWAs) became part of the tax landscape. One of the most frequently debated aspects has been the GST applicability on monthly maintenance charges collected from residents. While RWAs are typically not-for-profit in nature, their activities fall within the GST net under certain circumstances.

This article delves into the legal provisions, exemptions, threshold limits, and practical implications of GST on housing societies, backed by clarifications from CBIC, judicial precedents, and circulars.

1. Legal Framework and GST Registration for RWAs

🔹 Applicability of GST:

As per CBIC Circular No. 109/28/2019-GST dated 22nd July 2019, the following principles apply:

• If the aggregate turnover of the RWA exceeds ₹20 lakhs in a financial year, GST registration becomes mandatory.
• Exemption on maintenance charges up to ₹7,500 per month per member is available under Notification No. 12/2017 - Central Tax (Rate) dated 28th June 2017 (entry No. 77).

✅ Exemption Clause:

“Services by an unincorporated body or a non-profit entity to its own members by way of reimbursement of charges or share of contribution... up to an amount of ₹7,500 per month per member... for sourcing of goods or services from a third person for the common use of its members...”

2. When is GST Payable by a Housing Society?

Condition	GST Applicability
Monthly maintenance ≤ ₹7,500 per member	❌ No GST
Monthly maintenance > ₹7,500 per member & turnover < ₹20 lakhs	❌ No GST
Monthly maintenance > ₹7,500 per member & turnover > ₹20 lakhs	✅ GST Applicable

🔸 Note: GST is applicable only on the entire amount if the maintenance exceeds ₹7,500—not just the excess.

3. Example Exhibit – GST Computation

Example:

• Monthly maintenance: ₹8,000 per member
• Members: 100
• Annual turnover = ₹8,000 x 100 x 12 = ₹96,00,000

✅ GST is applicable as:

• Monthly charge > ₹7,500
• Annual turnover > ₹20 lakhs

Taxable Value = ₹8,000
GST @ 18% = ₹1,440 per member per month
Total GST per month = ₹1,440 x 100 = ₹1,44,000

4. Key Services Liable for GST in Housing Societies

• Security services (if outsourced)
• Facility management
• Common area electricity (if billed and recovered from members)
• Repairs and maintenance by third-party contractors
• Housekeeping services
• AMC contracts (e.g. lifts, generators, water treatment plants)

✅ RWAs can avail Input Tax Credit (ITC) on these services, if registered under GST and making taxable outward supplies (i.e., charging GST on maintenance).

5. Services Not Liable to GST / Exemptions

• Self-management or voluntary services (no third-party involvement)
• Municipal taxes, property tax, and statutory levies collected on actual basis
• Water charges, if recovered at actuals (clarified by CBIC Circular)

6. Judicial and Advance Ruling References

1. Apsara Co-op Housing Society Ltd. (Maharashtra AAR, 2018):
   • Clarified that GST is payable on the entire amount, not just on the excess of ₹7,500.
2. Kondhwa Residents Welfare Association (AAR, Maharashtra, 2018):
   • Upheld the exemption limit and applicability rules under Notification No. 12/2017.

7. Documentation and Compliance

• RWAs liable to GST must:
  • File GSTR-1 (monthly/quarterly)
  • File GSTR-3B (monthly summary return)
  • Maintain invoice records for services rendered
  • Maintain ITC ledger if availing credit on inward supplies

8. Frequently Asked Questions (FAQs)

Q. What if a society collects ₹7,400 from some members and ₹7,600 from others?

• GST is applicable only on the members paying more than ₹7,500, provided the society is registered.

Q. Can an RWA voluntarily register under GST?

• Yes, but exemptions will not apply once registered.

Q. Is GST applicable on sinking fund contributions?

• If collected for future maintenance and managed by the RWA, GST is applicable if threshold conditions are met.

Conclusion

While housing societies operate for the collective welfare of their members, GST implications cannot be ignored, especially where contributions exceed prescribed thresholds. Awareness and compliance with the GST framework help RWAs avoid unnecessary penalties and ensure transparent governance.

📌 Key Takeaway Chart

Criteria	GST Applicable?
Charges ≤ ₹7,500 & Turnover ≤ ₹20L	❌ No GST
Charges ≤ ₹7,500 & Turnover > ₹20L	❌ No GST
Charges > ₹7,500 & Turnover ≤ ₹20L	❌ No GST
Charges > ₹7,500 & Turnover > ₹20L	✅ GST @ 18% on Full Amount

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Discussions to this article

[Sadanand Bulbule]

Dear Sir

Your logical analysis has finally cleared the doubts that many were under the impression that, only the excess amount of Rs. 7500/- per month is taxable. Rather the entire amount is taxable subject to threshold limit.