Pay GST on society maintenance if monthly charge is more than this and annual collection is above Rs 20 lakh
All homeowners who live in a housing society need to pay some money to the housing society/RWA for the maintenance and welfare of the building. But did you know that on this maintenance charges paid by the homeowner, GST at 18% rate also needs to be paid. Goods and Services Tax (GST) at 18% rate is required to be paid by all homeowners who are living in a housing society that has an annual turnover of more than Rs 20 lakh or Rs 10 lakh (in some states) and the monthly maintenance charges paid is more than Rs 7500.#sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;}
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Say for example a housing society/RWA collects Rs 10 lakh per year from its members but during the year due to an urgent building maintenance need, the housing society had to collect Rs 21 lakh. In this case the respective housing society/RWA needs to take GST registration. However, GST registration once taken means the respective housing society/RWA have to keep complying with the applicable GST provisions year on year even if its turnover is below Rs 20 lakh, unless they cancel their GST registration.
However, despite the society taking GST registration, if the monthly maintenance amount is Rs 7500 or less from each members, then there is no need to pay GST and it does not matter if the annual collection of the society is more than Rs 20 lakh.
Read below to know more about GST on housing society maintenance and how it works if you have multiple units in a single society, and who can avoid paying GST.
Who has to pay GST on society maintenance charges?
Sanjay Chhabria, Indirect Tax Lead, Nexdigm, explains the primary criteria to determine whether GST is to be levied on housing society maintenance charges are:a:hover{text-decoration:none;} .liveEventMain_widget{margin-top:15px;padding-top:24px;border-top:2px solid #000;position:relative;font-family:Montserrat;} .liveEvent_slider{position:relative;overflow:hidden;} .liveEvent_slider ul{white-space:nowrap;list-style:none;margin-top:12px;} .liveEvent_slider ul.sliderContainer{margin-bottom:30px;} .liveEvent_slider ul li{white-space:normal;width:282px;vertical-align:top;display:inline-block;margin-right:12px;border-radius:12px;box-shadow: 0px 4px 12px 0px #2407461F;background-color:#fff;overflow: hidden;} .images_wrap{position:relative;} .images_wrap .cover_img{object-fit:cover;object-position:center;border-top-left-radius:4px;border-top-right-radius:4px;} .images_wrap .author_img{position:absolute;left:10px;top:13px;border-radius:10px;} .images_wrap::before{background-image: linear-gradient(180deg, rgba(11, 11, 46, 0) 20.31%, rgba(11, 11, 46, .6) 61.46%, #0b0b2e);content: "";height: 100%;left: 0;position: absolute;right: 0;width: 100%;} .liveEventMain_widget .details{padding:12px;} .liveEventMain_widget .category{font-size:12px;line-height:14px;font-weight:700;color:#6a11b0;margin-bottom:8px;} .liveEventMain_widget .course_name{font-size:16px;line-height:20px;font-family:Faustina;-webkit-line-clamp:2;overflow:hidden;height:40px;display:-webkit-box;-webkit-box-orient:vertical;font-weight:600;color:#000;} .liveEventMain_widget .details .author_name{font-size:13px;line-height:16px;color:#333;font-weight:400;margin-top:4px;-webkit-line-clamp:2;overflow:hidden;height:32px;display:-webkit-box;-webkit-box-orient:vertical;} .liveEventMain_widget .view{border: 1.5px solid #D51131; display: block; padding: 8px 0; text-align: center; border-radius: 4px; font-size: 14px; line-height: 16px; color: #D51131; margin-top: 12px; width: 100%; font-family: Montserrat; font-weight: 600; cursor: pointer;} .liveEventMain_widget .view span{display: inline-block; width: 6px; height: 6px; border-top: 1.5px solid #ed193b; border-left: 1.5px solid #ed193b; transform: rotate(90deg); position: relative; left: 5px; top: -2px;} .liveEventMain_widget .view span::after{content: ''; display: inline-block; width: 11px; border-top: 1.5px solid #ed193b; transform: rotate(45deg); position: absolute; top: 3px; left: -2px;} .liveEventMain_widget .arrow_btn{width: 26px; height: 25px; position: absolute; z-index: 11; background-size: 312px; cursor: pointer;} .liveEventMain_widget .nextprev-btn{display:inline-block;width: 100%; position: absolute; top: 59%;} .liveEventMain_widget .prev-btn{background-position: -212px -2px;left: -12px;} .liveEventMain_widget .next-btn{background-position: -241px -2px; right: -3px;left:unset;} .liveEventMain_widget .arrow_btn.disable{opacity:0.5;} .liveEventMain_widget .ts-dots{display:inline-block;position:absolute;top:34px;right:10px;} .liveEventMain_widget .ts-dots ul{display:inline-block;} .liveEventMain_widget .ts-dots li{width:7px;height:7px;border-radius:50%;background-color:#cdcdcd;margin:0 2px;display:inline-block;} .liveEventMain_widget .ts-dots li span{display:none;} .liveEventMain_widget .ts-dots li.active{background-color:#ed193b;} .liveEventMain_widget .topContain { display: flex; align-items: center; gap: 6px; } .liveEventMain_widget .topContain .imgBox { max-width: 40px; } .liveEventMain_widget .topContain .logoTitle { font-family: "Montserrat", "Verdana"; font-weight: 700; font-size: 20px; line-height: 100%; } .liveEventMain_widget .topContain .logoSubTitle{ position: relative; font-size: 18px; font-weight: 500; line-height: 1.2; color: #747474; margin-left: 24px; } .liveEventMain_widget .topContain .logoSubTitle:before{ content:''; position: absolute; left: -13px; top: 0; width: 1px; height: 100%; background-color: #838383; } .liveEventMain_widget .liveEvent_slider .liveEventCardContainer{ } .liveEventMain_widget .liveEvent_slider .liveEventCardContainer .liveEventCard{ display: flex; } .liveEventMain_widget .liveEvent_slider .liveEventCardContainer .liveEventCoverImg{ }
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1. Aggregate collection from members: The RWA or housing society's aggregate turnover should exceed Rs 20 lakh (Rs 10 lakhs for special category states), and
2. Monthly contribution taken from each member: The individual contribution per member per month exceeds Rs 7500.
"Both the above mentioned conditions must be satisfied together, for levying GST on maintenance expenses charged by RWA’s to its member, Also note that the GST at 18% is applicable on the entire amount (not just the excess over Rs 7500)," says Chhabria.
“Resident Welfare Association (RWA) shall be required to pay GST on monthly subscription/ contribution charged from its members, only if such subscription is more than Rs 7500 per month per member and the annual aggregate turnover of RWA by way of supplying of services and goods is also Rs. 20 lakhs or more,” said the Central Board of Indirect Taxes and Customs (CBDT) said in a circular dated July 22, 2019
According to Anand Parasrampuria, Associate Partner, Dhruva Advisors LLP, “In case, the annual turnover of the Housing Society exceeds Rs 20 lakh, then it is mandatory for the society to obtain GST registration. Furthermore, the Housing Society is liable to pay GST on monthly maintenance charges, if the maintenance charge exceeds Rs 7500 per month per member.
Which individuals are exempt from paying GST on house society maintenance charges?
If the homeowner is paying a monthly maintenance amount of up to Rs 7500 then GST is not required to be paid.The CBIC said in the circular, “If aggregate turnover of an RWA does not exceed Rs 20 Lakh in a financial year, it shall not be required to take registration and pay GST even if the amount of maintenance charges exceeds Rs 7500 per month per member”
"If your individual contribution per member per month is Rs 7500 or less, no GST is charged even if the society is registered," says Chhabria.
Table showing how is exempt from paying GST:
Annual turnover of housing society/RWA
Monthly maintenance charge
Whether exempt from GST?
More than Rs 20 lakh
More than Rs 7,500
Not exempt from GST.
More than Rs 20 lakh
Rs 7,500 or less
Yes, exempt from GST.
Rs 20 lakh or less
More than Rs 7,500
Yes, exempt from GST.
Rs 20 lakh or less
Rs 7,500 or less
Yes, exempt from GST.
Source: CBIC circular.
How does GST on house maintenance charges work for those with multiple apartments in same housing society or RWA?
"If a person owns multiple residential apartments in a housing society or residential complex, they will be required to pay Rs 7,500 monthly individually to each apartment they own," says Manmeet Kaur, Partner at Karanjawala & Co.Chartered Accountant Siddharth Surana explains: "Each flat or apartment in the residential society would be treated separately and the exemption of Rs 7,500 per month shall be applied per flat/residential apartment regardless of being owned by a same individual."
"Thus, if the amount collected by the society from each flat is Rs. 7,000 and if Mr. A owns two flats in a society making him liable for a total maintenance shell-out of Rs. 14,000 per month, it would not attract GST since maintenance charged for each individual flat is Rs. 7,000 per month which qualifies for the exemption as per the CGST(Rate) Notification No. 12/2017 and as amended from time to time," he says.
How is the Rs 20 lakh threshold calculated for housing society’s GST registration purposes?
Parasrampuria from Dhruva Advisors LLP explains how this turnover threshold of Rs 20 lakh is calculated. He says: “A housing society is obligated to obtain GST registration, if its aggregate annual turnover, in a financial year exceeds Rs 20 lakh. This threshold applies to total amounts collected from members, whether or not GST is actually payable on those amounts.”Chhabria from Nexdigm explains: "If a society’s income crosses the threshold of Rs 20 lakh at any point in time during a financial year, it would be liable to obtain GST registration. Further, once this registration is obtained the society would have to keep complying with the applicable GST provisions year on year. In a case, where the total turnover drops below 20 lakh and the contribution from the members continues to be above Rs 7500, in this case GST will be applicable till the registration is cancelled. Accordingly, in this case, the RWA would have to contemplate if they want to continue with the GST registration or apply for cancellation."
"Further, the value on which GST would be applicable on includes all maintenance charges, sinking fund, corpus fund, or contributions collected in any name, by the society. However, it would not include recoveries towards property tax or any other tax wherein the society is acting as mere agent for collecting and discharging on behalf of the flat owners. Please note, one-time collections for (e.g. repainting, capital repair) are also included for calculating the limit of Rs 7,500," says Chhabria.
Siddharth Chandrashekhar, Advocate & Panel Counsel for CBIC & CBDT, says this threshold limit includes all taxable, exempt, and non-taxable supplies. “This annual limit is not a one-time cap or linked to sporadic charges for one-off services like a flat repaint; it strictly applies to cumulative income over the financial year. Essentially, it functions as a safeguard, ensuring small associations remain compliant without the full regulatory burden of GST registration while larger turnover entities must collect and remit GST as per the full applicable amount," he says.
GST registration for a housing society is mandatory if its turnover is more than the GST eligibility criteria. "It is mandatory for the society to register under GST as per Section 22 of the CGST Act if it is collecting more than Rs 20 lakhs annually as maintenance. Failure to register despite being liable constitutes non-compliance and can lead to penalties, interest, and even a notice from the GST department," says Kaur.
Chandrashekhar says: "Once the aggregate annual receipts exceed Rs 20 lakh and the per-member maintenance exceeds Rs 7,500, the housing society must register for GST. Failing to do so exposes the society to compliance risks, including penalties, interest, & potential legal scrutiny by tax authorities. The authorities could view continued collection above the prescribed limits without registration as a deliberate lapse. Failure to comply can invite penalties: 100% tax due + interest (@18%) + fines. Even retroactive liability! The RWA’s exemption shield disappears if and when turnover crosses ₹20 lakh. Tax Authorities may pursue a combination of recovery, audits, or prosecution. Compliance here isn’t just optional—it’s survival!."
Frequently asked questions (FAQs) on GST levied on RWA monthly maintenance charges
CBIC in the circular released some FAQs about how GST on house monthly maintenance charges:FAQ 1: Where a person owns two or more flats in the housing society or residential complex, whether the ceiling of Rs. 7500/- per month per member on the maintenance for the exemption to be available shall be applied per residential apartment or per person?
Answer: As per general business sense, a person who owns two or more residential apartments in a housing society or a residential complex shall normally be a member of the RWA for each residential apartment owned by him separately. The ceiling of Rs 7500 per month per member shall be applied separately for each residential apartment owned by him.
For example, if a person owns two residential apartments in a residential complex and pays Rs 15000 per month as maintenance charges towards maintenance of each apartment to the RWA (Rs 7500 per month in respect of each residential apartment), the exemption from GST shall be available to each apartment.
FAQ 2: How should the RWA calculate GST payable where the maintenance charges exceed Rs 7500 per month per member? Is the GST payable only on the amount exceeding Rs 7500 or on the entire amount of maintenance charges?
Answer: The exemption from GST on maintenance charges charged by a RWA from residents is available only if such charges do not exceed Rs 7500 per month per member. In case the charges exceed Rs 7500 per month per member, the entire amount is taxable.For example, if the maintenance charges are Rs 9000 per month per member, GST @18% shall be payable on the entire amount of Rs 9000 and not on [Rs. 9000 - Rs. 7500] = Rs 1500.
FAQ 3: Is the RWA entitled to take input tax credit of GST paid on input and services used by it for making supplies to its members and use such ITC for discharge of GST liability on such supplies where the amount charged for such supplies is more than Rs 7,500 per month per member?
Answer: RWAs are entitled to take ITC of GST paid by them on capital goods (generators, water pumps, lawn furniture etc.), goods (taps, pipes, other sanitary/hardware fillings etc.) and input services such as repair and maintenance services.#sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;}
This story originally appeared on: India Times - Author:Faqs of Insurances
