GST on Co-operative Housing Society
What is Co-operative Housing Society?
Co-operative Housing Societies are entities registered under the co-operative laws of the respective States and which provide its its members amenities and services relating to housing.
Simply put these are a collective body of persons, who stay in a residential society. As a collective body, they would be supplying certain services to its members, be it collecting statutory dues from its members and remitting to statutory authorities, maintenance of the building, security etc.
Whether GST applies of Co-operative Housing Societies?
- Service provided by a Housing Society to its members be treated as service provided by one person to another.
- Supply of services by any person is liable to GST even if it is a non-profit or co-operative society. The activity of the society is considered as in the course or furtherance of business.
- As per section 2(17)(e) of the CGST Act, 2017, 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 is deemed to be a business.
- Thus activities of the housing society would thus attract the levy of GST and the housing society would be required to register and comply with the GST Law.
Compliance requirements for housing societies under GST
If the turnover of housing society is above 20 lakhs, it needs to take registration under GST in terms of Section 22 of the CGST Act, 2017.
However, taking registration does not mean that the housing society has to compulsorily charge GST in the monthly maintenance bills raised on its members. Notification No.12/2017 -Central Tax (Rate) dated 28.06.2017 at sr. no.77 provides for the following exemption to housing societies:
- Service by an unincorporated body or a non- profit 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 –
(a) as a trade union;
(b) for the provision of carrying out any activity which is exempt from the levy of GST; or
(c) up to 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
FAQ on above exemption:
- In view of the provision contained at (c) above, a society may be registered under GST, however if the monthly contribution received from members is less than Rs. 7,500/ – (and the amount is for the purpose of sourcing of goods and services from a third person for the common use of its members), no GST is to be charged by the housing society on the monthly bill raised by the society. However, GST would be applicable if the monthly contribution exceeds Rs. 7,500/ -.
- Certain statutory dues such as property tax, electricity charges etc form part of the monthly maintenance bill raised by the society on its members. The question would arise whether such charges should be included while computing the monthly limit of Rs. 7,500/- in terms of clause (c) of sr.no.77 of notification 12/2017 -Central Tax (Rate) dated 28.06.2017.
- As per clause (b) of the above exemption, exemption is available to housing societies for provision of carrying out any activity which is exempt from the levy of Goods and service Tax assuming that a housing society is a non-profit registered entity; and property tax and electricity is exempt from the levy of GST. Thus, charges, collected by the society on account of property tax, electricity charges and other statutory levies would be excluded while calculating the limit of Rs. 7,500/-.
- Further, the question would then arise that if the monthly bill is say Rs. 9,000/- (and the same is on account of services for common use of its members), will GST be applicable on Rs. 9,000/- or Rs. 1,500/- which is in excess of Rs. 7500/-. In such cases, exemption is available up to an amount of Rs. 7,500/- and GST would be applicable on the entire amount of Rs, 9000/- and not on [ Rs. 9000 – Rs 7500] = Rs 1500/-.
TRU vide F.No.332/04/2017-TRU released FAQs on levy of GST on supply of services to the Co-operative society and has clarified as under:
- As per Section 23. (1) of the CGST Act, 2017, the following persons shall not be liable to registration, namely:–
(a) any person engaged exclusively in the business of supplying goods or services or both that are not liable to tax or wholly exempt from tax under this Act or under the IGST Act;
(b) an agriculturist, to the extent of supply of produce out of cultivation of land.
- Thus, if the turnover of the society is less than Rs.20 Lakhs or even if the turnover is beyond Rs. 20 lakhs but the monthly contribution of individual members towards maintenance is less than Rs. 7,500/- (such services being exempt) and the society is providing no other taxable service to its members or outsiders, then the society (essentially Exclusively providing wholly exempt services) need not take registration under GST.
- FAQ released by CBDT:
Question Answer The society collects the following charges from the members on quarterly basis as follows:
1.Property Tax-actual as per Municipal Corporation of Greater Mumbai (MCGM)
2.Water Tax- Municipal Corporation of Greater Mumbai(MCGM)
3.Non- Agricultural Tax- Maharashtra State Government
4.Electricity charges
5.Sinking Fund- mandatory under the Bye-laws of the Co-operative Societies
6.Repairs & maintenance fund
7.Car parking Charges
8.Non Occupancy Charges
9.Simple interest for late payment.
From the tax/ charge as listed above, on which GST is not applicable.1. Services provided by the Central Government, State Government, Union territory or local authority to a person other than business entity, is exempted from GST. So, Property Tax, Water Tax, if collected by the RWA/Co-operative Society on behalf of the MCGM from individual flat owners, then GST is not leviable.
2. Similarly, GST is not leviable on Non-Agricultural Tax, Electricity Charges etc, which are collected under other statutes from individual flat owners. However, if these charges are collected by the Society for generation of electricity by Society’s generator or to provide drinking water facility or any other service, then such charges collected by the society are liable to GST.
3. Sinking fund, repairs & maintenance fund, car parking charges, Non- occupancy charges or simple interest for late payment, attract GST, as these charges are collected by the RWA/Co-operative Society for supply of services meant for its members.
Whether Input Tax Credit available for Housing Societies under GST?
RWAs would be entitled to take ITC in respect of taxes paid by them on the the following:
- 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.