With the advent and proposed implementation of GST, a tremendous buzz is created around it in the Housing Society Sector. This buzz has led to certain amount of ambiguity about its applicability, exemption limits and implementation in the Housing Sector.
Now let us understand what GST is all about!
GST is one indirect tax applicable in the entire nation, which eliminates multiple tax entities and consolidates into a single tax entity. A lot has been spoken and written about in various forums about whether housing societies would be in the purview of GST. It is been said GST would be applicable from 1st of July 2017 on all taxable services, but on CHS a clarity is still awaited.
- As per Chapter VI Section 22. (1) Every supplier shall be liable to be registered under the Act in the State or Union territory, other than special category States, from where he makes a taxable supply of goods or services or both, if his aggregate turnover in a financial year exceeds twenty lakhs rupees.
- As per Section 15 “aggregate turnover” means the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis), exempt supplies, exports of goods or services or both and inter-State supplies of persons having the same Permanent Account Number, to be computed on all India basis but excludes central tax, State tax, Union territory tax, integrated tax and cess.
- As per Circular No. 175/01/2014-ST “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 GST; or
- (c) up to an amount of five thousand rupees per month per member for sourcing of goods or services
- (d) from a third person for the common use of its members in a housing society or a residential complex”
While gazette notification with regards to GST isn’t released yet, it is amply clear from GST council approved rates that if Maintenance collection is more than 5000/- per member per month and if total annual collections are over 20 lakhs, society needs GST registration & needs to charge GST to members & also file returns.
As per schedule of GST rates for services as approved by GST council – Cooperative Societies are attracted 18% with full Input Tax Credit. Please refer Appendix A below which enumerates the applicability of GST.
To conclude, let us be optimistic that GST will bring in transparency in not just the housing sector but in all fields of commercial activities as taxes will now be levied only on consumptions of goods and services.
This information is as per our understanding of GST at this point of time and more evolved views may be forthcoming in due course of time. We also inform that the auditor views would still be recommended for total clarity and applicability.