GST on Housing Societies

A society which allows open plots for housing or flats to its members while also providing amenities and services to its residents is known as a Housing Society. In this article, we look at the applicability of GST on Housing Societies.

Applicability of GST

As per Central Goods and Service Tax Act, a taxable person is someone who supplies goods or service to another person and is not exempted from GST. The definition of a taxable person under GST includes natural persons, a Hindu Undivided Family, a company, a firm, a Limited Liability Partnership, an association of persons or a body of individuals, whether incorporated or not, in India or outside India, a local authority, Central Government or a State Government, Society as defined under the Societies Registration Act, 1860, or any Trust. Hence, a Co-operative Society registered under any of the Societies Act shall apply as a taxable person liable to pay GST in India. Further, as per the CGST Act, 2017, the term business includes, provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members. Hence, a society offering amenities and services to its member is also liable to pay GST.

Can a builder opt for existing tax rates?

Yes, the builder can avail previous tax rates in case of an on-going project. However, upon availing existing tax rates, the builder should send proper communication to the Jurisdictional Commissioner in the prescribed form. If the builder failed to produce the form, new tax rates shall apply as per new GST rates. The builder should note that after providing the form, the builder should make no alterations. Note:

The builder should use this option separately for all on-going projects.
This option also applies for specific schemes such as PMAY, Housing For All, RAY or any other housing schemes of Central or State Government.
Only a promoter or a builder and not the buyer.

Revising an Invoice for issuing debit/credit notes

If the promoter or builder issues invoices before 20th May 2019 and not related with the option of applicable tax rates, then the said person shall issue a debit/credit note to bring the transaction in conformity with the final option as exercised by the said individual.

Compliance Requirements for Housing Societies under GST

All housing society that exceeds 20 lakhs of revenue must obtain GST registration. However, if the monthly contribution received from its member is less than Rs.5000, no GST is to be charged by the housing society on the monthly bill raised by society. Further, other dues such as property tax and electricity charges, are exempt from GST and will not be included while calculating the limit of Rs.5000. Further, if the aggregate turnover of the society is up to only Rs.20 lakh in a financial year, then such supplies would be exempted from GST even if charges per member are more than Rs.5000. Know more about GST Return Filing.

Latest Update

As per the latest notifications by the GST Council on 22nd July 2019, the applicability of GST for Residents of Housing Societies and Resident Welfare Associations is revised. If the payment is more than Rs.7500 per member and the annual turnover of the Welfare Association is more than 25 lakhs, the GST will be applicable to the entire amount. The notification is provided below for quick reference. [pdf-embedder url="https://www.indiafilings.com/learn/wp-content/uploads/2017/09/GST-on-Housing-Maintenance-Charges.pdf" title="GST on Housing Maintenance Charges"]

Applicability of GST on Charges Collected by Society

A housing society would normally collect the following charges from its members:

Services provided by the Central Government, State Government, Union territory or local authority to a person other than a business entity, is exempt from GST. The Municipal Corporation of Greater Mumbai (MCGM) collects the property tax and water tax. If the housing society collects these charges on behalf of MCGM, they are not liable to pay GST. Know more about Pure Agent concept under GST.
GST will not be imposed on charges such as Non-Agricultural Tax, Electricity charges, etc., which are collected under other statutes from individual flat owners. However, if the same is collected by the society for electricity generation or to provide water facility or any other service, then GST is applicable on such charges.
Sinking funds, repairs and maintenance fund, car, parking charges, non-occupancy charges or simple interest for late payment collected by the society will attract GST.

Thus, the GST exemptions given ensure that there would be no tax burden on smaller societies where the monthly contribution of the individual members does not exceed Rs.5000. Whereas, larger societies with higher revenue or monthly contribution from members as discussed above would be under the ambit of GST. Click here for GST registration

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