GST exemption limit enhanced to Rs 7,500 for monthly charges paid to a housing society

  • Monthly maintenance charges of housing societies till Ra 7,500 have been exempted from GST
  • Earlier GST was applicable if the monthly bill was more than Rs. 5,000 per month

MUMBAI: Monthly maintenance charges, which one pays to co-operative housing society (CHS) or to be specific to its resident welfare association (RWA), will not attract Goods and Service Tax (GST), provided such charges are Rs. 7,500 or less per month. ‎The GST Council in its meeting held in January has enhanced the threshold applicability limit. Earlier GST was applicable if the monthly bill was more than Rs. 5,000 per month. The new limits apply from January 25.

‎There is no change in the GST registration requirement for CHS. It has to register if it’s annual turnover is Rs. 20 lakh or more.

An official release by the Ministry of Finance, issued on Wednesday, February 7, clarifies that: ‎RWAs shall be required to pay GST on monthly subscription charged from its members if such subscription is more than Rs.7,500 per month per member and the annual turnover of RWA by way of supplying of services and goods is also Rs. 20 lakhs or more.‎ Thus smaller CHS with a lower turnover do not have to register under GST and comply with its various obligations.‎

Maintenance charges are collected by a CHS for various purposes like providing security, lift maintenance, maintenance of common areas like a lobby or a garden. In tony luxury housing societies which have facilities like a club house, gym or swimming pool the monthly maintenance charges are steep, running up to more than a lakh. These charges payable by members are typically a reimbursement for expenses incurred by the CHS.

 The CBEC in an FAQ has earlier clarified that sinking fund, repairs & maintenance fund, car parking charges, non-occupancy charges, or simple interest for late payment of the dues of the CHS would be covered by GST as these are collected by the CHS for supply of services meant for its members.
The official release adds that under GST the tax burden on RWAs will be lower as they would now be entitled to Input Tax Credit (ITC) in respect of taxes paid by them on capital goods (generators, water pumps, lawn furniture etc), goods (taps, pipes, other sanitary/hardware fillings etc) and input services such as repair and maintenance services.
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5 Replies to “GST exemption limit enhanced to Rs 7,500 for monthly charges paid to a housing society”

  1. Himanshu Tripathi says:

    What to do if builder is adding GST even if maintenance charges are not more than 4000 for any of the flat in a 1000 flat society in greater Noida West

  2. Anjan Bhattacharya says:

    It appears that the aggregate turnover is the only criteria for a housing society to enter the ambit of GST. If this is not correct then please clarify that whether GST will not be applicable in case the annual aggregate turnover exceeds 20 lakhs but the monthly subscription per member is below 7500 per month.

  3. V R SHENOY says:

    I live in an apartment complex in Bangalore and the RWA is charging GST on the full amount when the the exemption limit is crossed instead of charging GST only on the amount in excess of the exemption limit as mentioned clearly in the flier on your web site. The relevant portion is quoted below,
    The Consultant hired by the RWA claims that the Fliers and FAQS do not have legal validity and only the act and rules apply. Please therefore let me know what is the correct method… ie GST on Full Amount or only on the excess above the exemption limit

    Request you to clarify by return,

    Quote from flier

    As per clause (b) of the above exemption, exemption is available to housing societies for provision of carrying out any activity which is exempt from the levy of Goods and service Tax assuming that a housing society is a non-profit registered entity; and property tax and electricity is exempt from the levy of GST. Thus, charges, collected by the society on account of property tax, electricity charges and other statutory levies would be excluded while calculating the limit of Rs.5,000/-.

    Further, the question would then arise that if the monthly bill is say Rs. 6,000/- (and the same is on account of services for common use of its members), will GST be applicable on Rs. 6,000/- or Rs.1,000/-. In such cases, exemption is available up to an amount of Rs. 5,000/ and GST would be applicable on the amount in excess of Rs.5,000/-

    1. Harish says:

      The validity of exemption under GST
      The wording used in the said notification no. 12/2017-ST is “share of contribution up to an amount of Rs. 7500 pm w.e.f 25th Jan 2018 per member per month”.

      Contribution in excess of Rs. 7500: If the contribution exceeds Rs. 7500/- per month, in our considered view it exempts the contribution up to Rs. 7500 pm per member, for sourcing goods and services from the third party for common use of members. It is nowhere mentioned in the said notification that the exemption benefit to Rs.7500 is not available to the member where the contribution per month for each member exceeds the limit of Rs.7500.

      It should be noted that , the exemption is available only for commonly procured services such as lift maintenance, security charges as well as common area electricity/water. Thus, if the monthly charges charged to members is more than Rs.7500 pm, per member, GST would be payable only on the excess amount over Rs. 7500 pm per member and not on the whole amount. Further, would be entitled to take eligible ITC of GST paid to third parties as inputs which would be proportionate to taxable supplies.

      If the society collects GST on whole amount of Maintenance charges and not in excess of exemption limit of 7500 it is advisable to seek confirmation from the GST department regarding the matter.

  4. sahil says:

    If a society have 400 flats and maintenance amount per month is Rs.8500 for 100 flats and Rs.6000 for 300 flats then on what amount GST should be charged. Also whether RWA can take input on all supplies or excess of Rs. 20 Lac.

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