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GST Applicable on Housing Society Funds Over Rs. 7500/Month; AAR Ruling Clarifies The Authority for Advance Ruling (AAR) determined that GST is applicable on the Repair and Maintenance Fund and Sinking Fund of a housing co-operative ...
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GST Applicable on Housing Society Funds Over Rs. 7500/Month; AAR Ruling Clarifies
The Authority for Advance Ruling (AAR) determined that GST is applicable on the Repair and Maintenance Fund and Sinking Fund of a housing co-operative society. The AAR clarified that if the total monthly maintenance charges per member exceed Rs. 7500, GST is applicable on the entire amount collected by the society. The exemption limit of Rs. 7500 per member per month is only applicable if the total monthly maintenance charges do not exceed Rs. 7500; if charges surpass this limit, GST is levied on the entire amount collected.
Issues Involved: 1. Applicability of GST on Repair and Maintenance Fund and Sinking Fund. 2. Applicability of the exemption limit of Rs. 7500/- per member on the components of the maintenance bill by a housing co-operative society.
Issue-wise Detailed Analysis:
1. Applicability of GST on Repair and Maintenance Fund and Sinking Fund:
The applicant, a housing co-operative society, sought clarity on whether GST is applicable on the Repair and Maintenance Fund and Sinking Fund. The society is registered under GST as its aggregate turnover exceeds Rs. 20 lakhs. The applicant argued that registration under GST does not necessitate charging GST on monthly maintenance bills if the total monthly bill per member is less than Rs. 7500/-. They cited Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, which exempts societies from charging GST if the monthly contribution per member does not exceed Rs. 7500/-.
The concerned officer referred to Circular No. 109/28/2019-GST dated 22/07/2019, which clarifies that services provided by Resident Welfare Associations (RWAs) to their members are exempt from GST if the monthly contribution does not exceed Rs. 7500/- per member. The officer confirmed that if the monthly contribution exceeds Rs. 7500/-, GST is applicable on the entire amount.
The Authority for Advance Ruling (AAR) observed that the applicant, being an unincorporated body and a non-profit entity, is engaged in the supply of services to its members and collects consideration for these services. As per the GST Act, "Repair and Maintenance Fund" and "Sinking Fund" are considered services. Therefore, such services provided by the applicant to its members are liable to tax subject to crossing the threshold turnover limit and as per the provisions of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.
2. Applicability of the Exemption Limit of Rs. 7500/- per Member:
The applicant contended that since the monthly maintenance charges per member are within Rs. 7500/-, they are not required to collect GST. The officer clarified that if the aggregate turnover of the RWA exceeds Rs. 20 lakhs, GST is payable on the entire amount if the monthly maintenance charges per member exceed Rs. 7500/-. Conversely, if the aggregate turnover is less than Rs. 20 lakhs, the RWA is not required to register or pay GST even if the monthly maintenance charges exceed Rs. 7500/-.
The AAR examined sample bills provided by the applicant, which included separate charges for sinking fund, repair and maintenance fund, and other maintenance charges. It was observed that if the total value of charges exceeds Rs. 7500/- per member per month, GST is applicable on the entire amount. For example, if the maintenance charges are Rs. 9000/- per month per member, GST @18% is payable on the entire Rs. 9000/-, not just the amount exceeding Rs. 7500/-.
Order:
1. Applicability of GST on Repair and Maintenance Fund and Sinking Fund: - GST is applicable on the Repair and Maintenance Fund and Sinking Fund.
2. Exemption Limit of Rs. 7500/- per Member: - If the gross amounts collected by the applicant exceed Rs. 7500/- per member per month, the exemption limit is not applicable. GST is applicable on the entire amount collected.
The AAR concluded that the exemption limit of Rs. 7500/- per member per month is applicable only if the total monthly maintenance charges do not exceed Rs. 7500/-. If the charges exceed this limit, GST is applicable on the entire amount.
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