GST on Maintenance Charges is Confirmed, AAR to Nariman Point CHS

AAR Maharashtra surprised Nariman Point cooperative housing society (CHS) with an advanced ruling and stated that GST will be applicable and need to be collected on maintenance charges if it surpasses the threshold limits. Thus activities of Nariman CHS towards its members were “taxable supplies” under the GST Act Get to know GST provisions and rules on the free supply of goods. Also, we have included rules regarding ITC reversal on free supplies of goods and services. Read More.

However, the Nariman CHS put their point that it did not “supply” and service to its members. Meanwhile, circular dated July 22, 2019 stats that cooperative housing society (CHS) has to demand GST on the overall maintenance charges in the case where they exceed Rs 7,500 per month, per member. Small CHSs having an annual business equal to or lower than 20 lakh don’t have to register for GST thus they do not have any GST obligation, or any maintenance charges.

AAR considered this circular and AAR said that the Government already made it clear to apply tax on housing societies under GST laws. The Applicant can appeal against the AAR order. Nariman Point CHS is just like any other CHS and it has collected maintenance charges from its members for ongoing and future maintenance work and pays various bills and taxes. For makes all doubts clear about GST obligations and correctness of its GST computations CHS reached AAR seeking Advance Ruling.

Many tax experts are not satisfied with the ruling, Sunil Gabhawalla, an indirect tax expert, said, “The tenet set by various judicial decisions is that a CHS cannot be said to be providing any services to its members. As there is no ‘supply’ of services, the incidence of GST does not arise.”

However the Authority of Advance Ruling (AAR) Get to know about AAR (Authority for Advance Rulings) under GST India along with its mechanism. Also, we have described its objectives, powers, orders, etc, in its order stated that “the term ‘supply’ under GST has very wide connotations. The contention made by the applicant with regard to the principle of mutuality is not tenable under the GST regime”.