How does co-operative housing society come under the purview of GST?
Let’s try and understand the same in light of the following provisions of GST:-
- As per section 9 of CGST Act, 2017 GST shall be levied on the supply of goods and services.
- As per section 7(a) of CGST Act, 2017 supply means that all forms of supply of goods or services or both such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for consideration by a person in the course or furtherance of business.
- As per section 2(84)(i) of CGST Act, 2017 a co-operative society which is registered under any law relating to co-operative societies is specifically included in the definition of person as per CGST Act.
- As per section 2(84)(i)(e) of CGST Act, 2017 the 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 is specifically included in the definition of business as per CGST Act.
Is it mandatory for all the co-operative housing society to register under GST?
As per section 22 of CGST Act 2017, it is mandatory for those housing societies to take GST registration whose aggregate turnover exceeds Rs. 20 lakhs annually.
Note: Mere registration under GST, does not make it mandatory for the society to levy GST on monthly maintenance bills from its members.
Note: Even commercial complexes or commercial societies are also required to obtain GST registration if the aggregate turnover exceeds Rs. 20 lakhs.
What will be included in aggregate turnover for a co-operative housing society?
For a co-operative housing society, the aggregate turnover mainly consists of a contribution from its members. Contribution from members may be taxable under GST or may be exempt. If the aggregate of the following collection from members of a co-operative housing society exceeds 20 lakhs then only it will come under the ambit of GST.
- Maintenance charges by whatever name called i.e. service charges, water charges, electricity charges etc.
- Sinking Fund
- Repairs and Maintenance fund
- Major Repairs fund.
- Non-occupancy charges
- Parking charges
- Interest charged to members
- Interest on Fixed Deposits (though it is exempt supply on which GST is not be levied)
- Rental income from towers, party hall rentals etc.
- Other miscellaneous collection from members
- Transfer fees and share transfer premium
- Any other sum levied by the society to its members by whatever name called.
Note: Property taxes comply with the conditions specified in relation to a pure agent. Hence, property taxes are excluded while calculating the limit of the aggregate value of turnover.
What is the amount of exemption/benefit granted to members of society? /Upto what amount of monthly maintenance charges GST is not to be levied by a registered co-operative housing society?
GST would be applicable if the monthly contribution from members exceeds Rs. 7,500/-. GST would be applicable on the amount which is in excess of Rs.7,500/- and not the whole amount.
If the monthly contribution received from members for sourcing of goods and services for the common use of its members from the co-operative housing society is above Rs. 7,500/- then GST will be applicable and levied at the rate of 18%.
CGST(R) Notification no. 2/2018 dated 25/01/18
Note: The above limit of Rs. 7,500 is applicable only when the aggregate turnover exceeds Rs. 20 lakhs. That means if charge per member is more than 7,500 but the aggregate turnover does not exceed Rs. 20 lakhs than there arises no question of GST.
Note: Monthly exemption benefit per member is only applicable to the housing society. In case of a registered commercial society, GST shall be levied irrespective of the amount.
Note: In case a Registered Co-operative Housing Society also compromises of shops, it will be considered as commercial to the extent of shops and GST shall be levied irrespective of the amount charged to shops. GST shall be levied on shops even if the collection from all other members (residential) is less than Rs. 7,500/-. The benefit of 7,500/- exemption was available only for residential societies.
⊗ Interpretation for the shops/ commercial units in a co-operative society is based upon the below definition.
According to Section 2(16) of Maharashtra Co-operative 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.
Click here for clarification on the exemption available to Co-operative Housing Societies under GST
Which all should be excluded while calculating the limit of Rs. 7,500/-?
An exemption of Rs. 7,500 is allowed to a housing society as it is presumed to be a non-profit registered entity providing services to members.
The following shall not be included while calculating the limit of Rs. 7,500/- as they are services provided by the CG, SG, UT or local authority to a person other than a business entity which is exempted from levy of GST. The society collects the following on behalf of Govt. from Individual flat owners (members) and pay to the credit of Govt. and hence will not be included in calculating the limit of Rs. 7,500/-
- Property tax
- Electricity Charges
- Water Charges
- Non-Agricultural Tax (Levied by Maharashtra State Government)
- Any other statutory levies
Note: Suppose electricity (eg. Generation of electricity by Society’s generator) or drinking water facility or any other service is generated within the society and provided to members, then such charges collected by the society would be counted in calculating the limit of Rs. 7,500/- and will also be liable for GST.
What are the charges which attract compulsory levy of GST?
Based on the Heading 9995 under which co-operative housing society is covered; service provided by a non-profit entity (Housing society satisfies that condition) to its own members by way of reimbursement of charges (e.g. property taxes, electricity charges, water charges) or share of contribution (all other maintenance charges).
- Share transfer premium
- Non-occupancy charges
- Charges towards rental of any Ground or clubhouse for any events
The above charges will be liable to GST if the society is registered under GST (for satisfying the aggregate turnover of Rs. 20Lakh condition). It is irrelevant whether the monthly contribution from any of the members or the member availing the service exceeds Rs. 7,500/-. Thus, the above amounts shall not be considered while calculating the limit of Rs 7500/- per month per member.
For reference CGST(R) Notification no. 12/2017 dated 28/06/17
Is co-operative housing society allowed to take set off of taxes paid?
Yes, A co-operative housing society is required to pay the liability of GST after setting off the input tax credit. In the pre-GST regime, the input tax credit of central excise and VAT paid on goods and capital goods were not allowed.
ITC can be claimed for taxes paid on
- Capital goods such as generators, water pumps, lawn furniture etc
- Inputs such as taps, pipes, other sanitary/hardware fillings etc.
- Input services such as Facility management, repair & maintenance services
Note: One of the conditions for claiming the input tax credit is that tax invoices should not remain outstanding for more than 6 months.
What are the compliances to be done by a co-operative society under GST?
A co-operative housing society will have to file the three monthly returns of GST:-
- Return in respect of the outward supply of services called GSTR-1 by 10th of succeeding month.
- Return in respect of inward supplies called GSTR-2A ( which will auto-populate but would need a reconciliation of input tax credit)
- Final monthly GST Return for net liability payable i.e. GSTR-3B which needs to be filed with liability for payment by 20th of succeeding month.
Annual Return of GST called GSTR-9 is also required to be filed by the end of 31st March 2019 (extended due date) for the financial year 2017-18.
Can a Co-operative housing society opt for composition scheme of GST?
No, Composition levy option has been allowed only for manufacturers, traders, and restaurants. So a co-operative housing society will have to register as a regular taxpayer under GST.
The author of the article is CA Ankita Khetan. If you have any queries concerning the above article. Please write to us either in the comments section below or email us on firstname.lastname@example.org.
Disclaimer: The views expressed in the above article is exclusive to the author. Anyone relying on it is expected to take adequate professional care before using/implementing the content of the article. The website/author will in no case be liable for any damages incurred by relying on the content without adequate consultation.
- FAQs on levy of GST on the supply of services to the Co-operative society published by Government of India
- Press release by CBIC on services provided by Housing Society dated 13th July 2017
- GST E-flier published by Central Board of Indirect Tax & Customs
- CGST (Rate) Notification no. 12/2017 dated 28th June 2017
- CGST (Rate) Notification no. 2/2018 dated 25th January 2018
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