Goods and Services Tax – GST – By: – Pradeep Jain – Dated:- 6-11-2017 Last Replied Date:- 7-11-2017 – GST Update on society charges collected by builder:- A builder is supposed to collected an amount for repairs and maintenance of flats. This collection is being kept in a separate account dedicated for the purpose. Until the residential housing society is formed, the expenses for repairs and maintenance of flats are borne out of this account. Once the society is formed, this account is being transferred to the society. This issue has been under litigation in service tax regime. In service tax regime, there were number of decisions on this issue wherein it was held that there is no need to pay the tax on these society charges collected by b
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e or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business; (b) import of services for a consideration whether or not in the course or furtherance of business; (c) the activities specified in Schedule I, made or agreed to be made without a consideration; and (d) the activities to be treated as supply of goods or supply of services as referred to in Schedule II. (2) Notwithstanding anything contained in sub-section (1),- (a) activities or transactions specified in Schedule III; or (b) such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be notified by the Government on the re
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will be termed as supply . In the case of supply, no consideration is involved. In general, if the consideration is not involved, it will not be treated as supply . However, certain activities are specified in Schedule I which will be considered as supply even if no consideration is involved. This schedule does not cover the society charges collected by the builder. Therefore, since no consideration is involved and builder is merely acting as a collector of amount which is subsequently transferred to society, in our view no tax should be payable on the same in GST regime. Further, since there is no change in legal position, the benefit of judgments given in service tax regime shall also be available. You can reach us at www.capradeepjain.c
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