Govt.’s contradictory interpretation for GST on Co-operative Housing Society

Govt.'s contradictory interpretation for GST on Co-operative Housing Society
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Govt.’s contradictory interpretation for GST on Co-operative Housing Society

GST to be charged on the entire amount of monthly maintenance charges or only on the differential amount if it exceeds Rs. 7,500?

Earlier it was only experts and societies who had different views and different approaches for levying GST on maintenance charges of society. But now even Govt comes up with a different view from the one expressed earlier by them.

The clarification was issued after a ruling was issued by the Advance Ruling Authority of Tamil Nadu – the ‘TVH Lumbini Square Owners Association, Chennai’ case.

The government has issued a clarification in Circular no. 109 dated 22nd July 2019. It has a contradictory view compared to views expressed in the GST Flyer issued by CBIC.  We also have a reply received from the Helpdesk of CBIC Mitra on the same issue which has a different view. The same has been attached for reference.

Let us have a look at different interpretation taken from time to time
If maintenance charges per month exceed the prescribed limit then
Particulars How much will be taxable?

Notification no. 12/2017 dated 28th June 2017

Entire Amount will be taxable
Advance Ruling dated 21st July 2019

Entire Amount will be taxable

Circular 109 dated 22nd July 2019

Entire Amount will be taxable
ICAI Publication – January 2019

Entire Amount will be taxable

Service Tax Circular no. 175 dated 10th Jan 2014

Entire Amount will be taxable
GST Flyer no. 51 Chapter 41

Amount in excess of 7,500 will be taxable

Reply on mail from CBEC Mitra Helpdesk dated 5th March 2019

Amount in excess of 7,500 will be taxable

Interpretation of CGST(Rate) Notification no. 12/2017 dated 28th June 2017

The above limit was increased from Rs. 5,000 to Rs. 7,500/- w.e.f. 25-01-18 vide CGST(R) Notification dated 25-01-18. For your reference – Notification is attached

CGST(Rate) Notification no. 2/2018 dated 25th January 2018

 

Advance Ruling on GST on Co-operative Housing Society

  • Sought by – TVH Lumbini Square Owners Association, Chennai
  • Ruling by – Advance Ruling Authority of Tamil Nadu
  • Issue – GST @18% is payable on the maintenance charges over and above Rs.7,500 or on the entire amount.
  • Response – If it exceeds Rs. 7,500, then GST @18% will be payable on the entire amount and not only on the amount of difference.

It is interesting to note that as per section 103(1) of CGST Act, 2017 that any advance ruling pronounced by the Authority of Advance Ruling will have limited applicability and it will be binding only upon the applicant as well as Government authorities(concerned officer or the jurisdictional officer). But once if advance ruling sought it binds you for a lifetime. It will continue to prevail if there is no change in the law, facts or circumstances supporting the original advance ruling was sought for.

Interpretation from CGST Circular 109 dated 22nd July 2019

The exemption in case of Co-operative Housing Society will be completely lost if the monthly maintenance charges exceed Rs. 7,500. Not only the differential amount but the entire amount will be leviable for GST @18%.

To understand better, if maintenance charges are Rs. 7,500 then there will GST will not be levied. But if maintenance charges are Rs.8,000 then GST will be 18% of Rs. 8,000 and not on Rs. 500 (i.e Rs. 8,000 – Rs. 7500).

 

Interpretation from E-publication on exempted supplies under GST published by ICAI in January 2019

The exemption in case of Co-operative Housing Society will be completely lost if the monthly maintenance charges exceed Rs. 7,500. Not only the differential amount but the entire amount will be leviable for GST @18%. Refer pages 41 to 44 for the same.

Interpretation from Service tax Circular no. 175/01/2014 dated 10th January 2014

During the old regime i.e service tax was levied on the entire amount if it exceeded the prescribed exemption amount.

 

Interpretation from GST Flyer no 51 on Co-operative Housing Society issued by CBIC

The GST Flyer mentions that it would be applicable on the amount higher of Rs.7,500/- (increased from Rs. 5,000). Here the word excess clearly indicated that one needs to be on differential mount only.

Interpretation from reply from CBIC Mitra Helpdesk on 5th March 2019

To get clarity over the taxability and applicability of GST on maintenance charges by a Co-operative Housing Society. Team Financepost had consulted the CBICmitra Helpdesk on toll-free helpline:1800-1200-232 & cbecmitra.helpdesk@icegate.gov.in. The email received from cbecmitra.helpdesk@icegate.gov.in is attached for your reference. While replying they have also referred that for any further clarification GST Flyer published on the official website may be used.

 

Conclusion

GST will be applicable at the rate of 18% to the member of a co-operative housing society on the entire amount of monthly maintenance charges if it exceeds Rs. 7,500/-. The reason for the confusion was the GST flyer and the words “up to an amount of Rs. 7,500/-” in the notification. After the clarification, it is clear that it is exempt if charges do not exceed Rs. 7,500 but the whole amount is chargeable to tax if it exceeds Rs. 7,500/-



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About CA Ankita Khetan 163 Articles
Ankita is a Chartered Accountant in practice and holds a Diploma in IFRS (from ACCA, UK). She is also a Commerce PG and Certified Independent Director (from IICA). She holds a certification in Forex and Treasury Management. Her area of expertise is GST and Income tax. She is passionate about reading, writing, and sharing knowledge on areas related to finance and taxation.

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