Authority for Advance Ruling (AAR) – Maharashtra GST : Levy of GST on Maintenance Collected by Housing Society is Valid Subject to Threshold Limit

Authority for Advance Ruling (AAR) – Maharashtra GST  : Levy of GST on Maintenances Collected by Housing Society is Valid  Subject to Threshold Limit 

In recent times, FM Department circular has again announced that the resident welfare association having 20 lakh or more annual turnover or if they charging INR 7500 per month must pay GST on certain conditions. Also, the Maharashtra Appellate Authority for Advance Ruling (AAAR) for GST has stated the same for all the resident welfare association.

A Mumbai based cooperative society has been charging an amount of money for their basic maintenance such as electricity bills, car parking charges and common society laws. After this decision came out by AAAR, it has been justified for the State’s Authority of Advance Ruling (AAR) as earlier there were multiple issues with several housing societies and clubs who were charging the maintenance cost to the residents and members having more than INR 7500.

Housing Society services under the Finance Act 1994 states that the supply of services under GST is the same as of finance act 1994. As it may not qualify for services and would attract GST. However, the Tax Department said that the SC ruling relates to the Sales Tax a regime where the concept of supply was not prevalent. It also said that collecting fees for the attainment of objectives as prescribed in the Society’s bylaws are nothing but business and activities carried out by the appellant do amount to supply, and hence are liable for GST.

As per the ruling of AAAR, has specified that in regards to Business and Furtherance of Business  is “Provision of any facilities or any benefits by a club, association or society to its members against a subscription or any other consideration would be construed as a business.” Since the housing society is providing services against the consideration, named as ‘society charges’ in the furtherance of business, hence activities would be supplying and attract GST.

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