Housing societies are required to pay Goods and Services Tax (GST) on the entire monthly maintenance amount if the contribution from each member exceeds ₹7,500, the Central Board of Indirect Taxes and Customs (CBIC) has clarified in a recent circular.
This means, if a society charges ₹9,000 per flat per month, GST at 18% will be levied on the entire ₹9,000, not just the ₹1,500 over the exemption limit.
Why the clarification was issued
Amid growing confusion and concern among apartment residents, tax officials clarified that the GST on apartment maintenance is not a new levy, but a regulation that has been in force since 2019.
According to a recent NDTV report, the clarification was issued to address renewed concerns triggered by misinformation spreading on WhatsApp groups and resident meetings.
When does GST apply to housing societies?
As per the CBIC, GST applies only if both of the following conditions are met:
- The monthly contribution per member exceeds ₹7,500, and
- The annual turnover of the society exceeds ₹20 lakh
If either of these conditions is not met, the society is exempt from GST and does not even need to register under the GST Act.
Charges that attract GST
The CBIC has also specified that several types of charges do attract GST if the ₹7,500 threshold and turnover limit are breached. These include:
- Repair and maintenance charges
- Sinking fund contributions
- Car parking fees
- Non-occupancy charges
- Late payment interest or penalties
In addition, charges for electricity or water supplied by the society through its own generators or borewells are also taxable under GST.
What is excluded from the ₹7,500 limit?
Certain payments collected by the society on behalf of the government or local authorities are not counted towards the ₹7,500 limit, and do not attract GST.
These include:
- Property tax
- Water charges billed by municipal bodies
- Non-agricultural tax
- Electricity charges from state utilities
These are considered statutory dues, not service charges, and hence are outside the scope of GST.
Clarification on full vs excess amount taxation
A common question from residents has been whether GST is applicable only on the amount exceeding ₹7,500 or the entire amount.
The CBIC has clarified that:
“If the monthly maintenance exceeds ₹7,500 per member, and the society’s total turnover is over ₹20 lakh, GST is levied on the full amount, not just the amount in excess.”
So, even if the charges are ₹7,600, GST will be calculated on the full ₹7,600.
Societies below ₹20 lakh turnover need not register
Housing societies with annual turnover of less than ₹20 lakh are not required to register under GST, even if some members are paying more than ₹7,500 in maintenance.
This provides relief to smaller societies and ensures that only larger, more commercial-like societies fall within the tax net.
Source: CNBC TV18
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