GST on Co-operative Housing Societies
GST Law and Procedure – GST Law and Procedure [January, 2019]
GST
Chapter Forty One
GST on Co-operative Housing Societies
INTRODUCTION
Co-operative Housing Societies are entities registered under the co-operative laws of the respective States.
According to Section 2(16) of the Maharashtra Cooperative Society Act, 1960, “housing society” means a society, the object of which is to provide its members with open plots for housing, dwelling houses or flats; or if open plots, the dwelling houses or flats are already acquired, to provide its members common amenities and services.
Simply put these are a collective body of persons, who stay in a residential society. As a collective body, they would be supplying certain services to its members, be it collecting statutory dues from its members and remitting to statutory authorities, maintenance of the building, security etc.
Co-operative Housing Societies – whether amenable to levy of GST
A So
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course or furtherance of business. The definition of business as per section 2(17) of the CGST Act, 2017 is as under
“business” includes
(a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit;
(b) any activity or transaction in connection with or incidental or ancillary to sub-clause (a);
(c) any activity or transaction in the nature of sub-clause (a), whether or not there is volume, frequency, continuity or regularity of such transaction;
(d) supply or acquisition of goods including capital goods and services in connection with commencement or closure of business;
(e) provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members;
(f) admission, for a consideration, of persons to any premises;
(g) services supplied by a person as the holder of an office which has been accepted by him in the c
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y charge GST in the monthly maintenance bills raised on its members. Notification No.12/2017 -Central Tax (Rate) dated 28.06.2017 at sr.no.77 provides for the following exemption to housing societies:
Service by an unincorporated body or a non- profit entity registered under any law for the time being in force, to its own members by way of reimbursement of charges or share of contribution –
(a) as a trade union;
(b) for the provision of carrying out any activity which is exempt from the levy of Goods and service Tax; or
(c) up to an amount of five thousand rupees 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
In view of the provision contained at (c) above, a society may be registered under GST, however if the monthly contribution received from members is less than ₹ 5, 000/- (and the amount is for the purpose of sourcing of goods and services from a third person fo
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levies would be excluded while calculating the limit of ₹ 5,000/-.
Further, the question would then arise that if the monthly bill is say ₹ 6,000/- (and the same is on account of services for common use of its members), will GST be applicable on ₹ 6,000/- or ₹ 1, 000/-. In such cases, exemption is available up to an amount of ₹ 5, 000/ and GST would be applicable on the amount in excess of ₹ 5, 000/-
TRU videF.No.332/04/2017-TRU released FAQs on levy of GST on supply of services to the Co-operative society and has clarified as under.
S.No
Question
Answer
1.
The society collects the following charges from the members on quarterly basis as follows:
1. Property Tax-actual as per Municipal Corporation of Greater Mumbai (MCGM)
2. Water Tax- Municipal Corporation of Greater Mumbai (MCGM)
3. Non- Agricultural Tax- Maharashtra State Government
4. Electricity charges
5. Sinking Fund- mandatory under the Bye-laws of the Co-operative Societies
6
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late payment, attract GST, as these charges are collected by the RWA/ Co-operative Society for supply of services meant for its members.
As per Section 23 (1) of the CGST Act, 2017, the following persons shall not be liable to registration, namely:
(a) any person engaged exclusively in the business of supplying goods or services or both that are not liable to tax or wholly exempt from tax under this Act or under the Integrated Goods and Services Tax Act;
(b) an agriculturist, to the extent of supply of produce out of cultivation of land.
Thus, if the turnover of the society is less than ₹ 20 Lakh or even if the turnover is beyond ₹ 20 lakhs but the monthly contribution of individual members towards maintenance is less than ₹ 5000/- (such services being exempt) and the society is providing no other taxable service to its members or outsiders, then the society (essentially exclusively providing wholly exempt services) need not take registration under GST.
Whether a
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ers if such subscription is more than ₹ 5000 per member and the annual turnover of RWA by way of supplying of services and goods is also ₹ 20 lakhs or more. Under GST, the tax burden on RWAs will be lower for the reason that they would now be entitled to ITC in respect of taxes paid by them on capital goods (generators, water pumps, lawn furniture etc.), goods (taps, pipes, other sanitary/hardware fillings etc.) and input services such as repair and maintenance services. ITC of Central Excise and VAT paid on goods and capital goods was not available in the pre-GST period and these were a cost to the RWA.
Thus, there is no change made to services provided by the Housing Society (RWA) to its members in the GST era.
Conclusion
In so far as tax implications on housing societies are concerned, the position prevailing under Service Tax is sought to be continued under GST. The tax burden under GST will be lower as the society would be entitled to take ITC which was hitherto not
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