GST FOR HOUSING SOCIETY
We all are aware that GST is big tax reform in India. This tax reform has also caused perplexity everywhere. In this article we had tried to answer most of your questions relating to housing society.
Let’s check this in detail -
GST is applicable to housing society?
Yes. GST is applicable to housing society
Housing society is not engaged in any business activities hence GST should not be applicable?
No. Under section 2 (17) of GST act the term “Business” had been defined which says Business includes - 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. Hence GST is applicable to housing society
Is there any limit or exemption available?
Tax payers having aggregate turnover in financial year up to 20 lakhs are exempt from tax. This is common exemption available to all tax payer. You can refer http://www.cbec.gov.in/resources//htdocs-cbec/gst/draft-model-gst-law-25-11-2016.pdf , page no 162, point 1 & 2(a) of GST law.
How to calculate Aggregate turnover?
Aggregate turnover means the aggregate value of all taxable and non-taxable supplies, exempt supplies and exports of goods and/or services Example of taxable supply are service charge,Non-occupancy charges, Interest on delay payment,Sinking fund, Parking charges, Transfer fee Example of exempt or nontaxable supply are Bank interest, FD interest,Water charges. Let’s see below scenarios -
Sr No Particulars Case 1 Case 2 Case 3 Case 4 Case 5 1 Total Service Charge 600000 800000 900000 1200000 200000 2 Total Sinking Fund 300000 400000 500000 600000 100000 3 Total Non-Occupancy Charges 100000 100000 100000 100000 100000 4 Total Transfer fee 150000 20000 0 60000 50000 5 Total Interest on delayed payment 80000 200000 400000 150000 75000 6 Total Non-member Income 0 600000 5000 20000 400000 7 Total Bank Interest 800000 10000 60000 45000 200000 8 Total Turnover 2030000 2130000 1965000 2175000 1125000 9 Contribution exceeds Rs.5000 per month Yes No Yes Yes No 10 Liable to Register Yes Yes No Yes No 11 Which items are taxable From Sr No 1 to 5 Sr No 6 - From Sr No 1 to 6 -
Is there any other exemption available to society?
Yes. Apart from above common exemption there is below exemption provided under schedule of GST to housing society
If society is collecting contribution less than Rs.5000 then they are not liable to tax
How to calculate Rs.5000 limit?
Rs.5000 limit includes service/Maintenance charge, Electricity charges, and Insurance contribution, Sinking Fund, Repair Fund, Non-Occupancy Charges, Late fee etc. Following contribution are excluded in calculation of Rs.5000 limit –
Contribution collected as pure agent
In every billing cycle raised,society should check whether to levy GST or not. Let take few example –
Particulars Case 1 Case 2 Case 3 Case 4 Case 5 Case 6 Service charge 4000 6000 4000 4000 6000 6000 Sinking fund 1000 2000 1000 1000 2000 2000 Late fee 200 200 200 200 200 200 Non occupancy charges 400 600 400 400 600 600 Transfer fee 0 0 25000 0 25000 0 Water Charges 0 0 0 10000 0 15000 Deposits 0 0 0 0 50000 50000 TOTAL 5600 8800 30600 15600 83800 28800 Exempt 0 0 0 10000 50000 20000 Liable 5600 8800 30600 5600 33800 21800
If society turnover exceeds 20 lakhs but it does not collect contribution from member above Rs.5000 then whether society is liable to comply with GST?
No. Society is not liable to comply with GST as there is specific exemption of Rs.5000 applicable to them explained above and if society is not collecting taxable rental income.There are no such provision in GST act which says tax payer should comply with act for exempted services. Voluntary registration or compliance can be opted.
If society turnover does not exceeds 20 lakhs but it collect contribution from member above Rs.5000 then whether society is liable to comply with GST?
No. Society is not liable to comply with GST as there is common exemption of Rs.20 lakhs applicable to them explained above. Voluntary registration or compliance can be opted. Restructuring of contribution amount to be collected from member is always preferable.
If society turnover exceeds 20 lakhs but it collect contribution from member above Rs.5000 then whether society is liable to comply with GST?
Yes. Society should register himself under GST act and comply with payment, return filing. Visit this URL- https://gst.gov.in/ to know more about registration. Restructuring of contribution amount to be collected from member is to be made by society to get out of purview of this compliance.
If society turnover exceeds 20 lakhs but it does not collect contribution from member above Rs.5000 but collecting rental income from non-member then whether society is liable to comply with GST?
If society is collecting rental income, advertisement from non-member then society should charge GST on such income and Pay GST to govt.
If monthly contribution is Rs.6000 then whether GST is to be charged on Rs.6000 or Rs.1000?
GST is charged on Rs.6000 and not Rs.1000. There is slab for levy of GST.
What is GST rate applicable here?
18% GST rate is applicable to housing society and SAC code is 00440245 (Maintenance and Repair Services).
Society should revise its bill format if liable for GST?
Yes. As per GST act there certain items to be included in Invoice format under which society should raise invoice. GST tax is payable on billing basis, i.e. even if a member does not pay the bill amount, Tax will have to be paid by the society. GST tax liability will be reduced from GST tax paid to service provider like security vendor, Housing keeping vendor etc. Net GST tax liability is to be paid.
Society is providing exempt services and taxable services then are we allowed to get entire credit of GST paid to our vendor?
No. You can refer http://www.cbec.gov.in/resources//htdocs-cbec/gst/draft-model-gst-law-25-11-2016.pdf. Page no 34, point 17(2) which clarify our query that society can get credit only of taxable services. Input credit for exempted services are not allowed to utilize. If part of the Service/goods is used for exemption goods/services and part for taxable, in that case, the credit will be given proportionately.
Eligible input credit = (total input credit / total turnover) * value of taxable services
Reverse charge mechanism is applicable to housing society?
Yes. It is applicable in case of advocate’spayments. Then society need to pay GST on such services to govt. and claim input credit. If servicesis received from unregistered person then also it is responsibility of registered person to pay GST to govt. Invoice of such services should contain GST applicable under reverse charge mechanism.
We believe that through this article we were able to clear your doubts and guided you to make decision for your society. If you require any further information then please connect with us on email@example.com. We will be glad to help you.