Courtesy : CA Hemant P. Vastani
First let us understand the definition of the following:
- Section 2 (84) “Person” includes—
(a) an individual;
(b) a Hindu Undivided Family;
(c) a company;
(d) a firm;
(e) a Limited Liability Partnership;
(f) an association of persons or a body of individuals, whether incorporated or not, in India or outside India;
(g) any corporation established by or under any Central Act, State Act or Provincial Act or a Government company as defined in clause (45) of section 2 of the Companies Act, 2013;
(h) any body corporate incorporated by or under the laws of a country outside India;
(i) a co-operative society registered under any law relating to co-operative societies;
(j) a local authority;
(k) Central Government or a State Government;
(l) Society as defined under the Societies Registration Act, 1860;
(m) trust; and
(n) every artificial juridical person, not falling within any of the above;
- Section 2(108) Taxable Supplymeans a supply of goods or services or both which is leviable to tax under this Act.
- Section 7(1) Supplyincludes––all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business;
- Sec 2(31) Consideration” in relation to the supply of goods or services or both includes–– (a) any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government;
- Sec 2(17) Business” includes––
(a) any trade, commerce, manufacture, profession, vocation,
adventure,wager or any other similar activity, whether or not it is for a pecuniary benefit;
(b) any activity or transaction in connection with or incidental or ancillary to sub-clause (a);
(c) any activity or transaction in the nature of sub-clause (a), whether or not there is volume, frequency, continuity or regularity of such transaction;
(d) supply or acquisition of goods including capital goods and services in connection with commencement or closure of business;
(e) provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members;
(f) admission, for a consideration, of persons to any premises;
(g) services supplied by a person as the holder of an office which has been accepted by him in the course or furtherance of his trade, profession or vocation;
(h) services provided by a race club by way of totalisator or a licence to book maker in such club ; and
(i) any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities;
From all the above definition following inferences may be made that Co-operative Housing Society shall be treated as a Person, making taxable supply under the definition of supply, and doing business for a consideration under CGST Act.
Whether Cooperative Soc. liable for Registration under GST ?When theaggregate turnover of a Cooperative Soc in a financial year exceeds twenty lakh rupees, such Cooperative Socbecome liable for Registration under GST as per Sec 22. (1) of CGST Act. That means the collection of money maintenance charges by society exceeds Rs 20 Lakhs per Annum then the Society need to be Registered.
It means that if theaggregate turnover (total receipts) of the Housing Societies which generally includes society maintenance charges from its members, receipts from investments, income receipts from advertisement board, receipts from mobile towers in premises, Share transfer fee from members, receipts from special purpose use of common area by member (marriage function etc) etc. Housing Society is liable to register if total of all the receipts (including exempted receipts) exceeds Rs. 20 Lakh in a financial year.
Thus Co-operative Housing Society or Residential Welfare Association who’s Turnover (collection money) crosses Rs 20 Lakhs per Annum become liable for Registration under GST and should charge GST (CGST + SGST) from its members.
Further, if the aggregate turnover of such Housing Society RWA isup to Rs 20 lakhin a financial year, then such supplies would be exempted from GST even if charges per member are more than Rs 5,000.
A Housing Society / RWA shall be required to pay GST on monthly subscription / contribution charged from its members if such subscription is more than Rs 5,000 per member and the annual turnover of RWA by way of supply of services and goods is also Rs 20 lakh or more.
Input Tax Credit (ITC) Allowed :
If the Society becomes liable to pay GST, it is allowed to take Input Tax Credit under Sec 16 (1) of CGST Act subject to conditions for taking input tax credit. Housing Society is entitled to 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 – Lift AMC, Housekeeping, Security, Fire AMC, Repairs & Maintenance, Contract staff, Accounting & Auditing Services and other such services.
Applicability of Reverse Charge Mechanism
Tax liability under Reverse Charge as defined under Sec 2(98) of CGST Act also applicable. That means tax shall be payable by the Housing Society when supplies are received which are notified Services as per Sec 9(3) of CGST Act like services of Goods Transport Agency, Advocate Services etc and also supplies from Un-registered Person under Sec 9(4) of CGST Act. It is advisable to avoid receiving supplies from Un-registered persons. (RCM suspended upto31/3/2018 in case of Sec 9(4) )
Whether Eligible for Composition Scheme?
Housing Society is not eligible for Composition Scheme.
Under GST, a Society who’s Annual Turnover Crosses Rs 20 Lakhs need to be Registered and such GST Registered Housing Society
- Need to Issue a Tax Invoice to its Members
- Need to file 3 returns in a month.
GSTR-1 by 10th of following month for Outward Supply (Maintenance Charges)
GSTR-2 by 15th of following month for inward Supply (Expenses Side) and
GSTR-3 by 20th of following month for monthly consolidated return and
GSTR – 9 by 31st December of the Following Year
Thus in all 37 returns per year will have to be filled.
Also to maintain proper Records of Supply & Expenses and preserve such records for 72 Months.
Services provided by Co-operative Housing Society or Residential Welfare Association comes under Taxable Supply and attracts GST.