Recent discussions on social media have brought the topic of Goods and Services Tax (GST) on housing society maintenance charges back into the spotlight. While seemingly new to some, tax authorities have clarified that the rules regarding GST on maintenance contributions have been in effect since 2019. This article aims to demystify these regulations and explain the conditions under which the 18% GST applies to your monthly bills.

It's crucial to understand that GST is not levied on all housing society maintenance charges. Specific conditions must be met simultaneously for this tax to be applicable.

The Two Triggers for GST

For a housing society's maintenance charges to attract GST at the rate of 18%, both of the following conditions must be satisfied concurrently:

1. Annual Turnover Threshold: The housing society's aggregate annual turnover must exceed ₹20 lakh in a financial year. (Note: For special category states, this threshold is ₹10 lakh).

2. Monthly Contribution Threshold: The monthly maintenance contribution or subscription charged per member by the society must be more than ₹7,500.

Important Clarification: If both conditions are met, the 18% GST is levied on the entire monthly maintenance amount, not just on the portion exceeding ₹7,500.

Financial Impact on Residents

When both conditions are fulfilled, the 18% GST can significantly increase your monthly housing expenses.

• Example: If your monthly maintenance charge is ₹9,000, the calculation would be:

  • GST Amount: 18% of ₹9,000 = ₹1,620

  • Total Monthly Payment: ₹9,000 (Maintenance) + ₹1,620 (GST) = ₹10,620

This represents a direct 18% increase on the maintenance component of your household budget.

When GST Does Not Apply: Exemptions

Understanding the exemptions is just as important as knowing when GST applies.

• Turnover Below Threshold: If a housing society's aggregate annual turnover is below the ₹20 lakh (or ₹10 lakh for special category states) threshold, it is exempt from charging GST on maintenance contributions, regardless of whether the per-member monthly charge exceeds ₹7,500. This provides relief to smaller societies.

• Contribution Below Threshold: Even if a society's annual turnover exceeds the threshold, if the monthly maintenance contribution per member is ₹7,500 or less, no GST is applicable on that contribution.

Multiple Property Owners

For individuals who own multiple apartments within the same housing society, the ₹7,500 threshold is applied on a per-unit basis. This means the maintenance charge for each individual apartment is evaluated independently against the ₹7,500 limit to determine if GST is applicable to that specific unit's maintenance bill.

Housing Society's Compliance Responsibilities

Housing societies are treated as service providers under GST law for the services they provide to their members (like maintenance, repair, and collection of charges).

• Registration: If a housing society's aggregate annual turnover exceeds ₹20 lakh, it is mandatory for the society to register under GST.

• Compliance: Registered societies must collect GST from members where applicable (i.e., when both conditions are met), file GST returns, and deposit the collected tax with the government.

Failure to register when required or non-compliance with GST regulations can lead to significant consequences, including penalties, interest on the unpaid tax, and potentially retroactive tax demands.

Conclusion

GST on housing society maintenance is not a new levy but a regulation in effect since 2019, applicable under specific conditions related to the society's turnover and the individual member's monthly contribution. The 18% tax significantly impacts the financial burden on residents when both conditions are met.

Both housing society management committees and residents must be aware of these rules to ensure proper compliance and accurate budgeting. Societies nearing the annual turnover threshold or considering changes in maintenance fees should consult with tax professionals to navigate the GST implications and avoid potential penalties. Understanding these rules helps foster transparency and ensures that societies and their members meet their tax obligations correctly.