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GST on Co-operative Housing Society

What is Co-operative Housing Society

Co-operative housing societies are the entities registered under the co-operative laws of the respective state and which provide its member’s amenities and services relating to housing. In simple words, it is a collective body of persons, who stay in a residential society and would be supplying certain services to its members, be it collecting statutory dues from its members and remitting to statutory authorities, maintenance of the building, security etc.

Whether GST applies of Co-operative Housing Societies?

Supply of services by any person is liable to GST even if it is a non-profit or co-operative society. The activity of the society is considered as in the course or furtherance of business. Business as per clause (e) of section 2(17) of the CGST act also includes “provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members“.

The activities of the housing society would thus attract the levy of GST and the housing society would be required to register and comply with the GST Law.

Exemption Available

Notification No.12/2017 -Central Tax (Rate) dated 28.06.2017 at sr.no.77 provides for the following exemption to housing societies:

Service by an unincorporated body or a non- profit entity registered under any law for the time being in force, to its own members by way of reimbursement of charges or share of contribution –

(a) as a trade union

(b) for the provision of carrying out any activity which is exempt from the levy of Goods and Service Tax

(c) up to an amount of five thousand rupees per month per member for sourcing of goods or services from a third person for the common use of its members in a housing society or a residential complex

As per clause (c) above if the housing society is collecting up to Rs. 5,000 per member per month then no GST is to be levied. The condition is that the amount is for the purpose of sourcing of goods and services from a third person for the common use of its members.

Therefore, if a society charges per day rent from a member for using its community hall then it is liable to GST as it doesn’t amount to procuring of goods or services and also not for common use but specific to a member.

Also, clause (b) above states that any amount which is exempted from GST is not be considered. Therefore, property tax, electricity charges etc which is exempt from GST is not considered in Rs. 5000 limit.

Also if the limit of Rs. 5,000 per month is crossed then GST is applicable only on the amount which is over and above Rs. 5,000. For example, a housing society gives a bill of Rs. 7,000 (doesn’t contain exempt goods or services)  to a member, in such case GST is payable on Rs. 2,000 only.

Registration Requirement

If the turnover of housing society is above 20 lakhs/ 10 lakhs, it needs to take registration under GST in terms of Section 22 of the CGST Act, 2017. The amount which is exempt as per above provisions is not included while calculating turnover.

As per Section 23. (1) of the CGST Act, 2017, the following persons shall not be liable to registration, namely:–

(a) any person engaged exclusively in the business of supplying goods or services or both that are not liable to tax or wholly exempt from tax under this Act or under the Integrated Goods and Services Tax Act

Thus, if the turnover of the society is even more than Rs. 20 lakhs but the monthly contribution of individual members towards maintenance is less than Rs. 5000/- (such services being exempt) and the society is providing no other taxable service to its members or outsiders, then the society need not take registration.

FAQ released by CBDT

Question Answer
The society collects the following charges from the members on the quarterly basis as follows:

1.Property Tax-actual as per Municipal Corporation of Greater Mumbai (MCGM)
2.Water Tax- Municipal Corporation of Greater Mumbai (MCGM)
3.Non- Agricultural Tax Maharashtra State Government
4.Electricity charges
5.Sinking Fund- mandatory under the Bye-laws of the Co-operative Societies
6.Repairs & maintenance fund
7.Car Parking Charges
8.Non Occupancy Charges
9.Simple interest for late payment. From the tax/ charge as listed above, on which GST is not applicable.

1. Services provided by the Central Government, State Government, Union territory or local authority to a person other than the business entity, is exempted from GST. So, Property Tax, Water Tax, if collected by the RWA/Co-operative Society on behalf of the MCGM from individual flat owners, then GST is not leviable.

2. Similarly, GST is not leviable on Non-Agricultural Tax, Electricity Charges etc, which are collected under other statutes from individual flat owners. However, if these charges are collected by the Society for generation of electricity by Society’s generator or to provide drinking water facility or any other service, then such charges collected by the society are liable to GST. 3. Sinking fund, repairs & maintenance fund, car parking charges, Non- occupancy charges or simple interest for late payment, attract GST, as these charges are collected by the RWA/Co-operative Society for the supply of services meant for its members

Under GST, the tax burden on RWAs will be lower for the reason that they would now be entitled to ITC in respect of taxes paid by them on capital goods (generators, water pumps, lawn furniture etc.), goods (taps, pipes, other sanitary/hardware fillings etc.) and input services such as repair and maintenance services.

Also Read – GST on Education Services

About Prateek Agarwal

Prateek Agarwal is a Practicing Chartered Accountant from Jaipur and been in practice for more than 7 years. He writes mainly about GST and Finance.

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