If you are paying Rs 5000 or more per month as maintenance charges to your co-operative housing society (CHS), then you may have to pay the Goods & Service Tax (GST) at the rate of 18% on the maintenance charges from July 1, 2017.
The GST bill has proposed that a CHS collecting Rs 5000 or more per month from a society member or if the annual maintenance collection of the CHS is above Rs 20 lakh, then 18% tax would be levied on the CHS.
However, if you or your society wish to avoid paying GST, your society will have to rework the maintenance bill heads appropriately.
The GST is not applicable on municipal tax, property tax, water bill, non-agricultural land tax, sinking fund, etc. All other charges, including repair fund, attract the 18% GST levy.
Hence, the CHS can create separate heads of expenses that are not liable to tax and the balance maintenance charges and repair fund can be shown separately for the purpose of GST. This would help avoid paying the GST completely or reduce the amount of GST payable by the society.
If the society’s maintenance amount is less than Rs 5,000 per member, but if the society’s membership base is large and the total collection exceeds Rs 20 lakh per annum, the society would be liable to pay GST. Such societies can split their buildings to form separate societies so that the collection amount per society does not cross the threshold limit of Rs 20 lakh.
The division of a society into multiple societies may be quite cumbersome and time-consuming, but it would be a good solution to avoid paying the GST.