FAQs: GST on Flat Maintenance Charges

GST law does not require registration of those entities whose aggregate turnover is below the prescribed threshold limit. Further, the exemption notification contains a list of services that are exempt from GST subject to certain conditions, restrictions and limits relating to individual supplies.

This could create confusion regarding the ultimate applicability of GST concerning specific supplies which is why the government issues clarifications in this regard from time to time.

In this article, we will be focusing on a circular issued to clarify specific issues regarding the applicability of GST on maintenance charges levied by the Residential Welfare Association (RWA).

GST on maintenance charges for apartments

With respect to the applicability of GST on Flat Maintenance Charges, following FAQs are answered.

Are residents, who pay the maintenance charges to the RWA in a housing society, exempt from paying GST?

Yes, maintenance charges paid by residents to the Resident Welfare Association are exempt up to Rs.7,500. In case the amount charged exceeds Rs.7,500 per month per member, GST is chargeable on the entire amount charged.

As per the Madras High Court order in the case of TVH Lumbini Square Owners Association in July 2021, the GST must be charged on the amount collected over and above Rs.7,500 and not the entire amount. It must be seen how the government takes this matter to the apex court.
 

Can Housing Societies Qualify for GST Exemption?

An RWA has an annual aggregate turnover of Rs.20 lakh (or Rs.40 lakh or Rs.10 lakh, as applicable) or less in a financial year. Is it required to take GST registration and pay GST on maintenance charges?

No, the RWA is not required to take registration and charge GST since its aggregate turnover does not exceed Rs.20 lakh (or Rs.40 lakh or Rs.10 lakh, as applicable) in the financial year even if the amount of maintenance charges exceeds Rs.7,500 per month per member.

Further, the registration and charging of GST would not be required where the aggregate turnover exceeded Rs.20 lakh in a financial year, but the monthly maintenance charges were up to Rs.7,500 per member.

The above can be summarised in the following table:

How should the RWA calculate GST payable where the maintenance charges exceed Rs.7,500 per month per member? Is the GST payable only on the amount exceeding Rs.7,500 or on the entire amount of maintenance charges?

As mentioned earlier, where the maintenance charges exceed Rs.7,500 per month per member, GST is chargeable on the whole amount. For example, if the maintenance charge is Rs.9,000, GST is chargeable on the entire amount of Rs.9,000. Note that it is assumed that the aggregate turnover of the RWA is Rs.20 lakh or more.

Expenses to Be Considered for Inclusion or Exclusion Under the GST Limit

With respect to expenses for inclusion/exclusion and Input Tax Credit (ITC) for Apartment Maintenance Expenses, the following FAQs are answered.

Can the RWA claim an input tax credit of GST paid on inputs and services used for making supplies to its members?

Yes, where the amount charged for such supplies is more than Rs.7,500 per month per member, the ITC would mainly be available on the following:

1. Capital goods such as generators, water pumps, lawn furniture, etc.
2. Goods such as taps, pipes, other sanitary/hardware fillings, etc.
3. Input services, such as repair and maintenance services.

Where a person owns two or more flats in a housing society or a residential complex, does the ceiling of Rs.7,500 per month per member apply to each residential apartment or person?

In the general business sense, the limit of Rs.7,500 per month per member shall apply separately to each apartment owner and not per member living in the apartment. It is because the person is considered a member of the RWA for each apartment separately.

Is the exemption available where flats are occupied for commercial use?

Yes, the exemption is available even when flats are occupied for commercial use since they qualify as members of the RWA. How the members use the apartments is not relevant.

Thus, it can be concluded that GST is chargeable only where both cases are satisfied:

1. The amount of maintenance charges is more than Rs.7,500 per month per member.
2. The aggregate turnover of the RWA is Rs.20 lakh (or Rs.40 lakh or Rs.10 lakh, as applicable) or more in the financial year.