GST on Housing Society and Resident Welfare Associations

A Cooperative Housing Society or resident welfare association (RWA) will be required to pay GST on monthly subscription or contribution charged from its members if payment received is greater than Rs 5,000 per member and the yearly turnover of society /RWA by means of supplying of services and goods is also greater than Rs 20 lakhs. In this article, we look at the applicability of GST on member or maintenance fee, input tax credit and accounting impact of GST on Cooperative Housing Societies.

Latest Update

As per the latest notifications on 22nd July 2019, the applicability of GST for Residents of Housing Societies and Resident Welfare Associations is revised. If the payment is more than Rs.7500 per member and the annual turnover of the Welfare Association is more than 25 lakhs, the GST will be applicable to the entire amount. The notification is provided below for quick reference.

Applicability of GST on Resident Welfare Associations

Housing societies and resident welfare associations having an aggregate annual turnover of over Rs.20 lakhs per annum will have to comply with GST regulations and

gst registration. The services provided by a Housing Society or Resident Welfare Association shall apply as supply and thus becomes taxable under GST. gst registration to read on GST Rate for Bike, Car, Tractor, Auto, Bus, Truck – HSN Chapter 87

Taxable and Non-Chargeable Parts of Housing Society Income

Not all charges or supply by a housing society would be taxable under GST. For instance, housing societies collect and remit property tax on behalf of the residents. GST would not be applicable on the property tax collected and remitted. On the other hand, maintenance and repair charges will be taxable. Similarly, parking charges and charges for swimming pool, clubhouse and other amenities would be taxable. Sinking fund or repair fund or painting fund would be considered non-taxable.

Input Tax Credit

Housing societies will be able to set off their tax liability by claiming input tax credit on various expenditures incurred on behalf of the residents for the upkeep of the property. However, no input tax credit will be applicable for the following types of expenditures incurred by the housing society or resident welfare association.

Electricity Expenses
Stamp Duty
Property Tax

Invoice Format for Housing Societies

With the implementation of GST, housing societies would have to make changes to their

invoice format. As the nature of supply made by a housing society or resident welfare association would be in intra-state, only CGST and SGST would be applicable. You can create GST invoices for housing societies using LEDGERS GST Software.

Benefits of GST Compliance for Housing Societies

It is advisable for most housing societies to obtain a GSTIN and be registered under GST. GST registration will allow the society to reduce costs by claiming the input tax credit. Also,

GST charged by suppliers for services like housekeeping, repairs, maintenance, lift AMC (Annual Maintenance Contract), fire AMC, security, contract staff, accounting as well as auditing services and others can be claimed as a refund if there is no output liability. gst registration for GST Registration or GST Return Filing

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Frequently Asked Questions

Common questions about GST on Housing Society Services Compliance.

Answer: As per the latest notification on 22nd July 2019, if the payment received from a member is more than Rs.7,500 per annum and the annual turnover of the housing society or RWA is more than Rs.25 lakhs, GST will be applicable on the entire amount charged to members.

Answer: Charges like maintenance and repair charges, parking charges, charges for using amenities like swimming pool, clubhouse, etc. collected by housing societies would be taxable under GST. However, charges like property tax collected and remitted would not be subject to GST.

Answer: Yes, housing societies can claim input tax credit on various expenditures incurred for the upkeep of the property, such as housekeeping, repairs, maintenance, security services, etc. However, ITC cannot be claimed on expenses like electricity, stamp duty, and property tax.

Answer: Yes, housing societies will need to make changes to their invoice format under GST. As their supply is intra-state, only CGST and SGST will be applicable on the invoices.

Answer: GST compliance allows housing societies to reduce costs by claiming input tax credit. They can claim refunds for GST charged by suppliers for various services if there is no output liability.

Answer: Yes, it is advisable for most housing societies to obtain GST registration. This will enable them to claim input tax credit and reduce costs, besides being compliant with the GST regulations.

Answer: No, sinking funds, repair funds, or painting funds collected by housing societies are considered non-taxable under GST.

Answer: The GST rate applicable to housing societies and RWAs would depend on the specific services they provide. For example, services like repairs and maintenance may be taxed at 18% GST rate.

Answer: Yes, housing societies can use GST software like LEDGERS GST Software to create GST-compliant invoices and manage their GST compliance requirements efficiently.

Answer: Non-compliance with GST regulations can lead to penalties and interest charges for housing societies. It is essential for them to obtain GST registration and comply with the relevant provisions to avoid any legal consequences.