TaxTMI 
TaxTMI 
GST on maintenance deposit collected from prospective flat buyers during construction period by the Builder
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....ST on maintenance deposit collected from prospective flat buyers during construction period by the Builder <br> Query (Issue) Started By: - GANESH KANCHAN Dated:- 10-9-2026 Goods and Services Tax - GST <br> Got 1 Replies <br> GST<br> <br> GST department has issued notice to the Builder to discharge duty on "Maintenance Deposit" appearing on the liabilities side of the Balance Sheet,. In fact maint....
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....enance deposit is collected from prospective flat buyers during construction period. Pending formation of Society/Association, builder keep this fund/deposit in a separate account. Once the Association is formed/registered, such deposit amount shall be transferred to Association account. is the GST officer is correct ? Your views with citation if any. --Reply By: Sanjeev Agarwal The Reply: On ....
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....the facts stated, the GST officer's demand appears unsustainable, provided the "Maintenance Deposit" is genuinely a deposit/corpus fund held by the builder on behalf of flat purchasers and subsequently transferred to the Society/Association, rather than consideration for maintenance services supplied by the builder. Under Section 2(31) of the CGST Act, a deposit is not treated as consideration fo....
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....r a supply unless the supplier applies it as consideration for that supply. Accordingly, mere receipt of money and its disclosure as a liability in the Balance Sheet does not make it taxable. The facts supporting the builder are: * Amount collected as maintenance deposit, not maintenance charges/advance maintenance charges. * Amount shown on the liabilities side of the Balance Sheet. * Fu....
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....nd kept separately pending formation of the Society/Association. * Builder does not appropriate the amount as its income. * Amount is ultimately transferred to the Society/Association. * Documentary evidence establishes the above. A particularly relevant precedent is Commissioner, CGST & Central Excise v. Manglam Build Developers Ltd., CESTAT Delhi, Final Order No. 50312/2022 dated 30.03.....
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....2022, where a similar maintenance deposit was held not to be consideration for maintenance services because it was maintained as a liability and transferred to the Society. This provides strong factual support. However, the position changes if the so-called deposit is actually advance maintenance charges, or if the builder is entitled to/utilises the amount for providing its own maintenance servic....
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....es. In that case, GST exposure may arise. Therefore, the defence should focus on the substance and documentary trail, particularly: * Flat Buyer Agreement clause; * Maintenance Deposit ledger; * Separate bank account, if any; * Balance Sheet disclosure; * Society/Association formation documents; * Bank proof of transfer to the Association; and * Purchaser-wise reconciliation o....
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....f amounts collected and transferred. Conclusion: If the deposit was merely held in trust/custodial capacity and transferred to the Association without appropriation by the builder, the builder has a strong and reasonably defensible position that GST is not payable merely on the receipt of the maintenance deposit. The exact SCN and contractual clause should nevertheless be examined before finalisin....
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....g the reply. <br>***<br> Discussion Forum - Knowledge Sharing....