GST On Housing Societies

The Indian economy has now adopted the only bracket of products and repair Tax (GST), and like everything else, the housing society is included during this reform too. There are, of course, two sides to the current new regime; one being, that those property prices are expected to scale back across the country. the opposite – living in housing societies is about to require an upward swing, directly impacting the customer’s pocket. this may come as an enormous blow to housing societies, which were, until now, beyond the ambit of service tax. this implies that societies are going to be susceptible to paying taxes under certain conditions. This will come as an enormous blow to housing societies, which were, until now, beyond the ambit of service tax. this suggests that societies are going to be prone to pay taxes under certain conditions.

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Compliance Requirements For Housing Societies Under GST

If a residential company’s turnover is over 200,000, it must register for GST under  Section 22 of the CGST Act, 2017. However,  registration does not mean that the housing company is required to include GST in the monthly maintenance bills paid to its members. Notification No.12/2017 -Central Tax (Rate) dated 28.06.2017 at sr.no.77 provides for the subsequent exemption to housing societies: Service by an unincorporated body or a non-profit entity registered under any law for the nowadays in effect, to its members by way of reimbursement of charges or share of contribution

(a) Ss a trades union

(b) For the availability of ending any activity which is exempt from the levy of products and repair Tax or

(c)  Amounts up to 7,000 500 rupees a month per member for the supply of products or services from a third party for the common benefit of members of the housing or residential organization.

As of 1st July 2017, housing companies that charge members a monthly maintenance fee of Rs 5,000 (per house) are charged 18% GST. In addition, if the company’s total annual maintenance revenue exceeds Rs. 20 lakhs, GST are charged at 18%. However, several things are going to be excluded from this 18%, like municipal tax, capital levy, water bill, non-agricultural property tax, and even sinking funds, among others.

Housing societies with maintenance below Rs. 5,000, but large enough for the annual total to travel above Rs. 20 lakhs, will come under GST. If the brink limit is above Rs. 20 lakhs but Rs. 70 lakhs, the housing society can go for the composition scheme. Under GST, the composition scheme allows registered taxpayers to pay tax at lower rates, if their turnover is a smaller amount than the desired limit, betting on certain conditions. Registered taxpayers with a turnover of but Rs.75 lakhs during a year (Rs. 50 lakhs in Uttarakhand), can go for this scheme.

Alternatively, buildings are allowed to make separate societies to scale back maintenance costs to below Rs. 20 lakhs.

What does CHS Members do?

Co-operative Housing Societies (CHS) will need to revise their maintenance bill heads to bifurcate taxes that were merged with overall maintenance costs earlier. By generating multiple invoice headers, the Resident Welfare Association (RWA) can show that the fees are paid directly by the company. this may help in reducing the balance maintenance amount on which GST would be calculated.

Input Tax Credit

GST On Housing Societies

Housing Societies will avail the advantages of ITC which suggests they’ll receive a write-off if they pay taxes on:

  • Repair and maintenance
  • Capital Goods (generators, furniture, water pumps, etc.)
  • Other Goods (Faucets, Pipes, Hardware, Building Materials) However, for them to qualify for this benefit, the reverse charging mechanism will apply to all goods and services received from the supplier;  which may be claimed from the maintenance fund’s debts. This benefit is out there if the quantity charged for these supplies is over ₹7500 per member.

A housing society can impart the advantages of Input decrease by lowering the upkeep charges for members, the quantity of which may be determined after proper analysis and comparison of output/input tax amounts against overall expenses and income.

Periodic Filing And Compliance Rules

A housing society has got to file 37 returns, three returns per month which include:

Billing Side – 11th of the subsequent month

Expense Side – 15th of the subsequent month

Consolidated Return – 20th of the subsequent month as well as

One Annual Return GSTR 9 by the top of 31st December next year (for the year 2019-2020 by 31st December 2020)

If a housing society deducts TDS, then they need to file GSTR7 by the 10th of the subsequent month. Housing Societies don’t make up the Composition Scheme.

MC/RWA are expected to take care of proper records of all Supply and Expense reports for 72 months for auditing purposes.

As per Section 23. (1) of the CGST Act, 2017, the subsequent persons shall not be vulnerable to registration, namely:–

(a) someone who is solely involved in the business of delivering products or services, or both, that does not appear to be taxed or fully excluded from taxation under this Act or the Integrated Goods and Services Tax Act;

(b) A farmer’s job is to provide items derived from the land’s cultivation. Thus, if the society’s annual turnover is less than Rs.20 lakhs, or if the annual turnover is more than Rs. 20 lakhs but individual members’ monthly maintenance contributions are less than Rs. 7,500 (such services being exempt), and the society provides no other taxable service to its members or outsiders, the society (basically exclusively providing wholly exempt services) does not need to register under GST.