GST Applicability

[Ethirajan Parthasarathy]

A Commercial Property in a Complex is let out. As per Association’s bye-Law, the shop owner is primarily responsible to discharge monthly (common) maintenance expenses.

As per corporation rules, the Landlord is liable to pay yearly Corporation tax.

But the rental agreement provides that the tenant is liable to pay the monthly maintenance to the Association and also pay the corporation taxes.

In the above circumstances, is the landlord liable to pay GST on monthly maintenance and the corporation tax borne by the Tenant.

[ARVIND JAIN]

It should be Applicable as there is no such exemption for the landlord of Commercial property. For Association we may take the same footing of Co-operative society unless it is registered as such. However, for the landlord the basic exemption limit of ₹ 20 lakh is available and if we presume the rent + tax amount is more than the basic exemption limit then GST is applicable.

To compute the exemption limit, for tax paid is to be included or not there is one FAQ released by The Ministry of Finance vide TRU F. No. 332/04/2017 for Co-operative society wherein 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. However, no such exclusion I have found in the normal cases where the Landlord collects Rent + Tax is that it should be part of Rent only and liable to GST subject to exemption Limit. Correct me if my findings are wrong.

[shwetal oswal]

If the landlord is collecting Corp. Tax and Society maintenance from the tenant and remitting the entire amount to Gov. Authority and Society respectively, then no GST should be charged on such amount , as the Landlord is merely collecting the said amount on behalf of the Gov. Authority and Society and paying the same entirely.

[Shilpi Jain]

As per section 15(2) any amount which the supplier is liable to pay but paid by recipient would be part of value of supply and thereby liable to GST. So both these would be liable. Further if the tenant is eligible for credit better to pay n take credit.

[KASTURI SETHI]

Sh.Ethirajan Parthasarathy Ji,

Sh. Shwetal Oswal is hinting towards the concept of 'Pure Agent' under Rule 33 of CGST Rules,2017. It is worth examination with Board's Circular No. 115/34/2019-GST, dated 11-10-2019.

Pl. examine if the service supplier conforms to the conditions laid down under Rule 33 and Board's circular dated 11.10.19.

AI Summary

GST on amounts collected for maintenance and taxes: taxable unless bona fide treated as pure agent under GST rules. GST applicability hinges on whether amounts collected by the landlord are part of the value of supply-taxable when the landlord supplies services and benefits from the receipts-or are true pass-throughs falling under the pure agent mechanism permitting exclusion from taxable value. Small supplier exemption thresholds may exclude liability. Administrative guidance treats certain cooperative society collections for municipal taxes as non-leviable when collected and remitted on behalf of owners; factual compliance with the pure agent conditions and related circulars is determinative.