GST

We all are aware that GST is big tax reform in India. This tax reform has also caused perplexity everywhere. Following chart will give you summary about GST applicability to housing society

Let’s check this in detail -

• GST is applicable to housing society?

Yes. GST is applicable to housing society

• Housing society is not engaged in any business activities hence GST should not be applicable?

No. Under section 2 (17) of GST act the term “Business” had been defined which says Business 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. Hence GST is applicable to housing society

• Is there any limit or exemption available?

Tax payers having aggregate turnover in financial year up to 20 lakhs are exempt from tax. This is common exemption available to all tax payer. You can refer http://www.cbec.gov.in/resources//htdocs-cbec/gst/draft-model-gst-law-25-11-2016.pdf , page no 162, point 1 & 2(a) of GST law.

• Is there any other exemption available to society?
• Yes. Apart from above common exemption there is below exemption provided under schedule of GST to housing society . If society is collecting contribution less than Rs.5000 then they are not liable to tax. Rs.5000 limit has been extended to 7500 recently.

• How to calculate Rs.5000 limit?

Rs.5000 limit includes service/Maintenance charge, Electricity charges, and Insurance contribution, Sinking Fund, Repair Fund, Non-Occupancy Charges, Late fee etc. Following contribution are excluded in calculation of Rs.5000 limit –

1. Deposits
2. Donations
3. Contribution collected as pure agent

In every billing cycle raised, society should check whether to levy GST or not.

Let take few example –

• If society turnover exceeds 20 lakhs but it does not collect contribution from member above Rs.5000 then whether society is liable to comply with GST?

No. Society is not liable to comply with GST as there is specific exemption of Rs.5000 applicable to them explained above and if society is not collecting taxable rental income. There are no such provision in GST act which says tax payer should comply with act for exempted services. Voluntary registration or compliance can be opted.

• If society turnover does not exceeds 20 lakhs but it collect contribution from member above Rs.5000 then whether society is liable to comply with GST?

No. Society is not liable to comply with GST as there is common exemption of Rs.20 lakhs applicable to them explained above. Voluntary registration or compliance can be opted. Restructuring of contribution amount to be collected from member is always preferable.

• If society turnover exceeds 20 lakhs but it collect contribution from member above Rs.5000 then whether society is liable to comply with GST?

Yes. Society should register himself under GST act and comply with payment, return filing. Visit this URL - https://gst.gov.in/ to know more about registration. Restructuring of contribution amount to be collected from member is to be made by society to get out of purview of this compliance.

• If society turnover exceeds 20 lakhs but it does not collect contribution from member above Rs.5000 but collecting rental income from non-member then whether society is liable to comply with GST?

If society is collecting rental income, advertisement from non-member then society should charge GST on such income and Pay GST to govt.

• If monthly contribution is Rs.6000 then whether GST is to be charged on Rs.6000 or Rs.1000?

GST is charged on Rs.6000 and not Rs.1000. There is slab for levy of GST.

• What is GST rate applicable here?

18% GST rate is applicable to housing society and SAC code is 00440245 (Maintenance and Repair Services).

• Society should revise its bill format if liable for GST?

Yes. As per GST act there certain items to be included in Invoice format under which society should raise invoice. GST tax is payable on billing basis, i.e. even if a member does not pay the bill amount, Tax will have to be paid by the society. GST tax liability will be reduced from GST tax paid to service provider like security vendor, Housing keeping vendor etc. Net GST tax liability is to be paid.

• Society is providing exempt services and taxable services then are we allowed to get entire credit of GST paid to our vendor?

No. You can refer http://www.cbec.gov.in/resources//htdocs-cbec/gst/draft-model-gst-law-25-11-2016.pdf. Page no 34, point 17(2) which clarify our query that society can get credit only of taxable services. Input credit for exempted services are not allowed to utilize. If part of the Service/goods is used for exemption goods/services and part for taxable, in that case, the credit will be given proportionately.

Eligible input credit = (total input credit / total turnover) * value of taxable services

• Reverse charge mechanism is applicable to housing society?

Yes. It is applicable in case of advocate’s payments, auditor’s payments. If advocate or auditor is unregistered person then it is responsibility of registered person to pay GST to govt. You can take input credit of same tax paid.

About Author

CA Priya Subodh Dodal

We at Esanchalak realize the social impact of Co-operative movement in our country shall not only stay but also grow in times to come in various sectors. Our mission is to provide efficient governance for every co-operative organization to attain efficiency and self-sustainability for the good of every member of the society.