Taxation of maintenance charges collected by housing society
AAR gave an important ruling dated 17th September,2019 regarding GST and exemption on maintenance, electricity charges etc. charged by housing society in case of Prestige South Ridge Apartment Owners Association  110 taxmann.com 235 (AAR-KARNATAKA) which is discussed as below:
Facts of the Case
The applicant is engaged in providing maintenance and repairs of the common area of the apartments & surrounding areas viz. corridors, pathways, gardens, clubhouse, swimming pool, lifts, etc., providing lighting in common area, undertaking periodic up-keep of equipments etc. , in the play area, etc.They collect contributions from its members of apartment calculated on the basis of super built-up area owned by the members. In addition, it separately collects contribution towards corpus fund for future contingencies. The applicant procures goods and services from third party vendors for maintenance of the apartments and charges the maintenance charges on its members.Applicant is a non-profit association.
Whether the activity of procuring Goods and Services from third parties for upkeep and maintenance of Apartments and collecting monies from its members to pay third party vendors is an activity liable to GST or any exemption is provided for maintenance charges collected from members ?If exemption is available, whether it is available on per member basis or per flat basis, as some members could have more than one flat?Whether the exemption as per entry no 77 of Notification I2/2017 Central Tax (Rate) is a standard exemption that can be claimed irrespective of amount collected towards maintenance?Whether the electricity charges paid to BESCOM (Electricity supply authority) for the power consumed towards common facilities and separately recovered from members, liable to GST?Whether the Corpus/ Sinking Fund collected from members liable to GST?
The activity of procuring Goods and Services from third parties for upkeep and maintenance of apartments and collecting monies from its members to pay third parties is an activity liable to GST. The exemption of Rs. 7,500/ per month per member is available– in terms of entry no. 77 of Notification 12/2017 – Central Tax (Rate) dated 28.06.2017, for maintenance charges collected from members.The benefit of exemption up to Rs 7500/- is applicable on per flat basis, when members have more than one flat.The exemption on maintenance charges charged by a Resident Welfare Association (RWA) from resident is available only if such charges do not exceed Rs.7,500/ – per month per member. In case the charges exceed Rs.7,500/ – per month per member, the entire amount is taxable.The electricity charges paid to BESCOM for power consumed towards common facilities and separately recovered from members is liable to GST as consideration received for the supply of maintenance services to the members.The Corpus Fund or Sinking Fund collected from members is not chargeable to GST, as it amounts to deposits received towards future supply of services to members
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e-DiNero. Group GST Team