Opinion on GST for Housing Societies (RWA)

[Ashwani Rustagi]

Dear Members

Your opinion is solicited on the below matters.

Our RWA has taken over maintenance work from the Builders effective from 01-04-2024 and before this society was managed by the Builder. Builder has not yet handed over accounts and other financial/legal obligations to RWA. Now maintenance activities are being managed by the RWA w.e.f. 01-April-2024.

We would like to have opinion on the below matters:

1. During the year 2023-24, Builder has paid some Annual Maintenace Expenses which also covers part of the current financial year. Builder has shown these expense as pre-paid in the books as per financials filed with the ROC. Though Builder has not yet officially handed over the books of account/balance sheet. These expenses are relating to Annual Maintenance Expenses. Will there be any GST implications on RWA to account for these expense in RWA books.

2. Society has various sizes of flats (including EWS and shops) and the monthly maintenance charges ranges from Rs. 1500 to 10,000/-. At present RWA is charging GST on all flats irrespective of the amount of monthly maintenance and the GST is being deposited regularly to the GST authorities. Can there be any GST implications at the time of GST audit or any flat owner can make claim where the monthly maintenance charges are Rs.7,500 or less.

3. There are few flat owners who have not paid monthly maintenance are being charged interest in the monthly invoice. Please advise about the charging on GST on interest in invoice:

a. It is necessary to show outstanding interest for the delayed payment in invoice, can we accrue GST on the basis of receipt of payment.

b. Where the arrear of monthly maintenance amount is also related to the period prior to April 24, the arrears are being collected by the RWA (both prior and post April 24) to give no dues to the flat owner. How to account for the GST on the maintenance expense recovered on behalf of the builder which is prior to April 2024).

4. RWA has filed case against builder for recovery of IFMS (Interest Free Maintenance Security) amount along with the interest in NCLT. IFMS amount was paid by the owners at the time of booking of flats to the Builder and the money belongs to flat owners. Is there any GST liability on the interest amount accrued /to be claimed from the Builder and accounted for in the books of account.

5. RWA plans to carry out Facade Repair/Painting of all flats and would recover the same from the flat owners. RWA will take GST credit for the facade cost and will also charge GST to the owners. Will it be Capex cost or Maintenance Cost for invoicing to the flat owners. Can the recovery of the facade repair cost from the owners be made through pre-paid meters.

Best Regards

CS Ashwani Rustagi

9958215415

[Shilpi Jain]

Too long.. too many questions.. suggested to contact a professional and take advice accordingly.

[KALLESHAMURTHY MURTHY K.N.]

Dear querist, 

1. Expenses towards annual maintenance attract GST @18% (9%+9%) as per books of accounts maintained.

2. Any amount collected as GST in the invoice must be discharged in the respective month even if the threshold limit is below Rs. 7500-00 where Sec. 76 is applicable. 

3. Interest does not attract GST. 

a. Interest collected does not form part of the taxable turnover. 

b. If the amount collected for the previous year does not exceed Rs. 7500-00 on a monthly basis, it will not be liable for GST.

4. As in point (3). 

5. Tax collected on annual maintenance from the flat owners attracts tax @18% and any excess tax collected over and above this rate will have to be discharged as required u/s 76. That means any amount collected as tax cannot be retained. 

The above is for education purpose not a legal advice.

AI Summary

Maintenance service GST: annual maintenance is taxable and collected GST must be discharged even where threshold exemptions apply. Annual maintenance services provided or invoiced by the RWA are treated as taxable and attract GST as reflected in the books; any GST collected in invoices must be deposited in the relevant period even if threshold-based exemptions might apply. Interest charged on delayed maintenance payments is described as not forming part of taxable turnover and therefore not subject to GST. Collections of arrears and recoveries from owners, including for prior periods or fac ade repairs with input tax credit claimed, must be treated so tax collected cannot be retained in excess and must be discharged as required.