INDIA
There has lately been much confusion among people living in gated societies with respect to whether Goods and Services Tax (GST) is applicable on their maintenance amount. The confusion has been exacerbated by social media messages carrying misinformation. Read more about it here.
There has lately been much confusion among people living in gated residential societies with respect to whether Goods and Services Tax (GST) is applicable on their maintenance amount. The confusion has been exacerbated by social media messages carrying misinformation. Now, tax authorities have clarified that the levy on maintenance amount is not a new one and has been in effect since 2019.
When is GST applicable?
According to the Central Board of Indirect Taxes and Customs (CBIC), housing societies are required to pay GST on the entire monthly maintenance amount if contribution for each flat exceeds Rs 7,500 and the society has an annual turnover of over Rs 20 lakh. If either of these conditions is not met, the society is exempt from paying GST and also does not need to register under the GST Act.
CBIC statement
"If the monthly maintenance exceeds Rs 7,500 per member, and the society’s total turnover is over Rs 20 lakh, GST is levied on the full amount, not just the amount in excess," the CBIC said in a statement. This means that if your monthly flat maintenance amount is Rs 8,000, tax will be levied on the full amount and not just the Rs 500 above the exemption limit.
Rules could vary across states
GST rules on maintenance charges could vary from state to state. For instance, the Madras High Court had ruled in 2021 that the tax must be charged on the amount collected over and above the Rs 7,500 threshold and not the entire amount. However, that ruling does not apply to societies outside Tamil Nadu.
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