GST on Society

CA Pathik Shah, Partner, B. P. Shah & Co.

1. The society collects the following charges from the members on the quarterly basis as follows:

a. Property Tax-actual as per Municipal Corporation of Greater Mumbai (MCGM)
b. Water Tax- Municipal Corporation of Greater Mumbai (MCGM)
c. Water charges
d. Electricity charges
e. Sinking Fund- mandatory under the Bye-laws of the Co-operative Societies
f. Repairs & maintenance fund
g. Non occupancy charges
h. Parking charges
i. Simple interest for late payment
j. Additional painting fund
k. Other maintenance related expenses

Ans: As per notification 12/2017- Central Tax (rate) dated 28-6-2017,

“services by an unincorporated body or a nonprofit entity registered under any law for the time being in force, to its own members by way of reimbursement of charges or share of contribution upto an amount of Rs. 7500 per month per member for sourcing of goods or services from a third person for the common use of its members in a housing society or a residential complex would not be liable for tax.”

Accordingly, amount collected in excess of Rs. 7500 per month per member would be taxable. In calculation of Rs. 7500 per month per member following items should be consider:

• Maintenance charges
• Water charges other than water taxes
• Car parking charges
• Non occupancy charges
• Simple interest for late payment
• Sinking fund
• Repairs fund
• Additional painting fund
• Other maintenance related expenses
• Any other charges
• Common banquet hall charges from members
• Club house charges from members
Legal charges

On following items, GST would not be applicable, so it should not be included in calculation of Rs. 7500 limit:

• Property tax – actual as per municipal corporation of greater Mumbai (MCGM)
• Water tax – as per municipal corporation of greater Mumbai (MCGM)
• Non – agricultural tax – Maharashtra state government
• Electricity charges actual (In this society can consider previous 3 months
• electricity bills to charge actual amount in next maintenance bill)

Other than above, if society receives any hall rent charges from third party, space rent charges from third party then such amount should be separately taxable and not included in limit of Rs. 7500.

2. Is GST to be collected on whole amount if a member pays 8000 per month or only Rs 500? (Govt Levies are not included in this amount)

Ans: As per notification 12/2017- Central Tax (rate) dated 28-6-2017, services by an unincorporated body or a nonprofit entity registered under any law for the time being in force, to its own members by way of reimbursement of charges or share of contribution upto an amount of Rs. 7500 per month per member for sourcing of goods or services from a third person for the common use of its members in a housing society or a residential complex would not be liable for tax.

As per this clause, the amount received upto Rs. 7500 per member per month is exempt and any amount exceeding Rs. 7500 will be taxable.

Accordingly, amount collected in excess of Rs. 7500 per month per member would be taxable.

3. Do all members have to pay GST even if only few members cross 7500 limit?

Ans: As stated in above question that amount collected in excess of Rs. 7500 per month per member would be taxable. So, members whose amount crosses Rs. 7500 limit would be liable for GST.

4. If a member crosses 7500 in May 2018 (he/he will pay GST in that month), will that member have to pay GST in June 2018 if his outgoing is under 7500 in that month?

Ans: As stated in above question that amount collected in excess of Rs. 7500 per month per member would be taxable. So, if in next month amount is below 7500 then GST would not be applicable.

5. What will happen if society does not apply for GSTN despite of society coming under GST ambit?

Ans: As per section 122 of CGST Act, where a taxable person who is liable to be registered under this act but fails to obtain registration shall be liable to pay a penalty of Rs. 10,000 or an amount equivalent to the tax evaded, whichever is higher. Similar provision is also applicable for Maharashtra GST Act. So, minimum penalty would be Rs. 20,000.





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