GST on housing society maintenance charges explained: Here’s what apartment owners should know
To clear up growing confusion among apartment residents, the Central Board of Indirect Taxes and Customs (CBIC) has clarified that housing societies must pay Goods and Services Tax (GST) on the entire maintenance amount if each member’s monthly contribution exceeds Rs.7,500.
The clarification was issued after many residents questioned whether GST applies only to the portion above Rs.7,500 or the full amount. According to the CBIC, if a member’s monthly maintenance contribution crosses Rs.7,500 and the housing society’s annual turnover exceeds Rs.20 lakh, GST is applicable on the full contribution, not just the excess amount.
Deepak Kumar Jain, founder and CEO, TaxManager.in explains that the recent clarification from CBIC reaffirms the GST applicability on housing society (RWA) maintenance charges—it is not the first time this has been addressed. In fact, a similar clarification was issued via a Ministry of Finance notification dated 22 July 2019, which stated that RWAs (Resident Welfare Associations) are exempt from paying GST if individual member contributions are below Rs.7,500 per month, regardless of the RWA’s annual turnover.
The current threshold of Rs.7,500 has been in effect since January 2018, when it was revised from the earlier limit of Rs.5,000.
As per the prevailing GST rules, RWAs are required to collect GST on monthly maintenance charges only if both of the following conditions are met:
1. The monthly maintenance contribution per unit exceeds Rs.7,500.
2. The RWA’s total annual turnover from the supply of goods and services exceeds Rs.20 lakh.
If both conditions are satisfied, GST is applicable on the entire maintenance amount, not just the portion exceeding Rs.7,500. This clarification is consistent with the government’s earlier communications and serves to eliminate ongoing confusion among RWAs and homeowners regarding GST liabilities, he said.
“Since this has been an existing rule for several years, the recent clarification is unlikely to lead to any increase in monthly maintenance costs,” he said.
