Synopsis
On April 14, tax officials clarified that GST on apartment maintenance charges has been in place since 2019. The clarification addresses growing confusion among residents, especially as compliance efforts tighten. A recent court ruling has also influenced how GST is applied to these charges.Key Takeaways
- The GST on apartment maintenance is not new; it has existed since 2019.
- Residents must pay 18% GST if maintenance exceeds Rs 7,500 monthly.
- The Madras High Court ruling allows GST on the excess amount only.
- Tax compliance efforts are increasing among housing societies.
- Some RWAs are still not following the rules, prompting tax authorities to take action.
New Delhi, April 14 (NationPress) In light of increasing concerns and confusion among apartment dwellers, tax officials have reiterated that the Goods and Services Tax (GST) on apartment maintenance fees is not a novel regulation.
This is a long-standing rule that has been enforced since 2019, they emphasized.
The clarification comes as housing societies nationwide are experiencing rising anxiety and discussions, particularly on social media and during community gatherings.
According to a report from NDTV Profit, the Central Board of Indirect Taxes and Customs (CBIC) had, in 2019, mandated that flat owners must pay 18 percent GST on maintenance fees if the payments made to their Resident Welfare Association (RWA) surpass Rs 7,500 monthly.
This regulation has existed for some time, but it has recently gained attention due to heightened compliance measures by tax authorities.
Nevertheless, a ruling by the Madras High Court in 2021 provided some relief. The court decided that GST should apply only to the portion of the maintenance fee that exceeds Rs 7,500, rather than on the entire amount.
This ruling effectively overturned a 2019 circular released by the CBIC and a decision from the Authority for Advance Rulings (AAR), which had indicated that if monthly charges exceeded Rs 7,500, GST should be applicable on the whole amount, not just the excess.
Certainly, the tax authority has not contested the Madras High Court ruling in any superior court to date.
This implies that the ruling remains in effect, although it may not be applied consistently across all states. Some tax officials might still adhere to the original CBIC interpretation, as reported.
Presently, RWAs are obligated to collect 18 percent GST on monthly maintenance charges only if two specific criteria are met: the monthly maintenance per apartment exceeds Rs 7,500, and the society's annual turnover exceeds Rs 20 lakh.
If these conditions are satisfied, then the housing society must register under GST and levy tax on the total maintenance amount, it noted.
The report also mentioned that many apartment complexes in major cities are still not complying with this regulation. Consequently, the tax authority is now urging RWAs to adhere to the rules and ensure accurate tax payments.
