No GST if maintenance paid to housing society is less than Rs 7,500 every month

The Authority for Advance Rulings, Tamil Nadu has ruled regarding the GST exemption on maintenance charges paid to a housing society by a member.

It was clarified that housing society is required to collect GST on maintenance charges charged from its members only if it exceeds Rs 7,500 per month and the entire amount is taxable.

Earlier, the maintenance charges in excess of ₹5,000 attracted GST and the limit was revised in excess of ₹7,500 effective from January 25, 2018. However, confusion among housing society and members was expecting a ruling regarding the limit on aggregate or over the prescribed limit.

Hence, in its order, the AAR bench provides a numerical illustration.

Example:  If the maintenance charges are Rs 9,000 per month per member, GST shall be payable on the entire amount of Rs 9,000 at the rate of 18%. It shall not be payable on the differential of Rs 1,500 (Rs 9,000 minus Rs 7,500).

The ruling has been recently made public and is in sync with a clarification issued (after the order) by the finance ministry on July 22.

Further, Societies are required to collect GST on monthly contribution or subscription charged from its members if the annual turnover of society exceeds the threshold limit of Rs. 20 lakhs by the supply of goods or services. Thus, it will not have to collect and pay GST even if the monthly amount of maintenance charges exceeds Rs 7,500 per month per member.

Maintenance charges are collected by a housing society for various purposes like providing security, lift maintenance, maintenance of common areas like a lobby, garden, clubhouse, swimming pool, to name a few instances.

These charges are typically a reimbursement for expenses incurred by the housing society against payments made to third parties.

In this case, before the AAR, a Chennai housing society – TVH Lumbini Square Owners Association contended that if individual contributions towards maintenance exceed Rs 7,500 per month, GST is liable to be paid on the differential, which is only on charges over and above this sum. The AAR ruled otherwise.

To be concluded,

Society is required to collect GST on monthly contribution or subscription charged from its members if

• The annual turnover of RWA exceeds the threshold limit of Rs. 20 lakhs by a supply of goods or services and
• If the monthly subscription charges exceed Rs. 7,500 per flat per month.