GST on Housing Society and Resident Welfare Associations
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.
GST on Housing Maintenance ChargesApplicability 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 obtain GST registration. The services provided by a Housing Society or Resident Welfare Association shall apply as supply and thus becomes taxable under GST.
Click here 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.
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