In between the rising troubles and confusion among apartment residents, government officials cited that the Goods and Services Tax (GST) on apartment maintenance charges is not a new law.
It is the current law that has been in place since 2019, and they kept it.
The clarification has arrived as housing societies in the nation see the rising panic and debate, particularly on social media and in community meetings.
In 2019, the Central Board of Indirect Taxes and Customs (CBIC) asked that flat owners pay 18 per cent GST on maintenance charges if the amount paid to their Resident Welfare Association (RWA) surpasses Rs 7,500 per month.
This rule has been there for a long time, but it has returned because of tighter compliance efforts by tax officials.
The Madras High Court’s 2021 ruling has drawn some relief. It was held by the court that GST must be levied only on the part of the maintenance amount that surpasses Rs 7,500 — not on the entire amount.
A 2019 circular issued by the CBIC and a decision by the Authority for Advance Rulings (AAR) have been overruled by the above ruling, which cited that if the monthly charges surpass Rs 7500, then GST shall be applicable on the whole amount and not just the excess.
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Also, the tax department till now has not appealed the Madras High Court ruling in any higher court.
It directed that the judgment stands, though it may not be complied with in all states. Some tax authorities may still proceed with the original CBIC interpretation, as per the report.
At present, RWAs are mandated to collect 18% GST on monthly maintenance charges merely when two requirements are fulfilled- the per-apartment monthly maintenance surpasses Rs 7,500, and the society’s annual turnover is more than Rs 20 lakh.
If both such requirements are applied, then the housing society should enrol under GST and assess tax on the whole maintenance amount, it said.
As per the report, various apartment complexes in big cities are still not complying with the same regulations. Consequently, the tax department is now asking RWAs to adhere to and ensure effective tax payments.
