AOP and GST

[Nisanth N]

Background is an AOP in Kerala...an apartment complex and its residents association registered under Kerala Society Registration Act with 100 odd members. We had collected a lumpsum maintenance deposit before GST act. We collect monthly maintenance charges based on square feet of each apartment.

1) Is there any difference (benefits in GST payment) if maintenance charges are unitwise equal?

2) is there GST to be paid by AOP if only 2 or 3 members have a monthly maintenance charges more than 7500?

3) Is a GST account and filing of GST returns etc by AOP a viable/ tax efficient option if it is just for 2-3 members ?

[Sadanand Bulbule]

Refer CBIC Circular No.109/28/2019-GST dated 22/07/2019 for clear details.

Maintenance charges paid by residents to the Resident Welfare Association are exempt up to Rs. 7,500. In case the amount charged exceeds Rs.7,500 per month per member, GST is chargeable on the entire amount charged.

However contrary to this general understanding, in terms of Hon'ble Madras High Court judgement of July 2021 rendered in the case of TVH Lumbini Square Owners Association, tax is to be charged on the amount exceeding Rs.7,500 and not the entire amount. 

[Shilpi Jain]

Having maintenance unit-wise same , if less than 7500 then no GST and no registration required

Even if one unit exceeds 7500 and if aggregate turnover exceeds 20L/40L as applicable, registration would be required

Cost benefit analysis to be done in this aspect. Though is law requires registration and compliance, this cannot be an aspect to be looked at.

Else one should look at reducing the maintenance charges before 7500 to stay out of registration requirement.

AI Summary

Association Seeks Clarity on GST for Apartment Maintenance Fees; Conflicting Views on Exemption Thresholds and Application. An association of persons (AOP) in Kerala, managing an apartment complex, is seeking clarity on GST implications for maintenance charges. They collect monthly maintenance fees based on apartment size and are concerned about GST obligations if only a few members pay more than Rs. 7,500. Responses suggest that maintenance charges are exempt from GST up to Rs. 7,500 per month per member, but GST applies to the entire amount if exceeded, according to a CBIC circular. However, a Madras High Court judgment indicates GST should apply only to the excess amount. Registration is necessary if turnover exceeds certain thresholds.