Implications of GST on Maintenance Charges collected by Housing Societies and Resident Welfare Associations

GST Applicability

GST applies to the maintenance charges collected by a society from its members only if all the following conditions are satisfied:

ConditionExplanation1. Society is registered under GSTRegistration is required if the society’s aggregate annual turnover exceeds ₹20 lakh (for most States).2. Monthly contribution exceeds ₹7,500 per memberContributions up to ₹7,500 per month per member are exempt from GST.3. Services provided are not fully exemptedIf both above conditions are met, the taxable portion attracts GST at the applicable rate (usually 18%).

Exemption Notification

The relevant exemption is given under:

Notification No. 12/2017–Central Tax (Rate), dated 28th June 2017, Entry No. 77.

It states that:

“Service by an unincorporated body or a non-profit entity registered under any law, to its own members by way of reimbursement of charges or share of contribution —

(a) up to an amount of ₹7,500 per month per member for sourcing of goods or services from a third person for the common use of its members in a housing society or a residential complex — shall be exempt from GST.”

Examples

ScenarioGST ApplicabilitySociety collects ₹7,000/month per memberExempt (below ₹7,500)Society collects ₹8,000/month per memberGST applies on entire ₹8,000, not just excess ₹500 (as per CBIC clarification)Society’s total receipts < ₹20 lakh/yearNo GST registration required, hence no GST even if above ₹7,500Society collects ₹8,000/month but total receipts < ₹20 lakh/yearExempt, since not registered under GST

Rate of Tax

• 18% GST is applicable on the taxable amount (usually charged on the total monthly maintenance if above ₹7,500).

• The society can claim Input Tax Credit (ITC) on goods/services used for maintenance — e.g., lift repair, generator fuel, security services, housekeeping, etc.

Other Notes

• Sinking fund, repair fund, car parking, common area electricity, etc. are considered part of maintenance and included in the ₹7,500 limit.

• Non-occupancy charges or penalties (not in nature of maintenance) may be treated differently, depending on the case.

• GST must be collected and remitted under SAC 9995 – “Services of membership organizations.”

CBIC Clarification

As per CBIC Circular No. 109/28/2019–GST dated 22 July 2019:

“If the contribution exceeds ₹7,500 per month per member, the entire amount is taxable, not just the amount exceeding ₹7,500.”