The Central Government has given a little relief to the co-op housing societies that have an annual income of over Rs 20 lakhs or those that have been collecting monthly maintenance charges of more than Rs 5,000 by relaxing the norms of GST.
The co-op housing societies, having an annual income of over Rs 20 lakh or those collecting monthly charges of more than Rs. 5,000, are required to pay 18 per cent GST on their income from July 1, 2017 onwards, but now effective January 2, 2018, the societies have been collecting monthly charges up to Rs. 7,500 from their members who have been exempted from paying 18 per cent GST. In other words, the GST will be applicable only to those societies collecting monthly charges of more than Rs. 7,500.
The societies’ income includes the money earned while transferring flats in the name of new owner in case of resale of flats, repairs and maintenance charges, parking charges, sinking fund, non-occupancy charges, or simple interest for late payment of dues, which attracts GST, since these charges are collected for supply of services meant for members.
In many instances, transfer fees, that are charged by the societies and paid by incoming and outgoing members when a flat in the society is sold, contribute significantly towards a society’s annual collection. While the model bylaws under the Maharashtra Co-operative Societies Act have placed a limit of Rs 25,000 on transfer fees, in reality the fees run into a lakh or more per transfer. Thus, collections from transfer fees may mean that even societies housing the middle classes also find themselves having a turnover of over the threshold of Rs 20 lakh.
Maintenance charges are collected by co-op housing societies for purposes like providing security, lift upkeep, maintenance of common areas and are typically a reimbursement for expenses incurred.
If total collections of the societies are less than Rs 20 lakh a year, then they are not required to be registered under GST. Consequently, they are not liable to impose GST on taxable services. Smaller societies with lower annual collection (revenue) are out of the GST ambit.
However, in luxury societies having facilities like a club house, gym or swimming pool, monthly maintenance charges are steep, running up to over a lakh. The annual collection of such societies are typically far higher than the Rs 20 lakh threshold. So, GST is levied by such societies.
There are over 90,000 registered cooperative housing societies in Maharashtra, out of which nearly 50,000 cooperative housing societies are in Mumbai, Navi Mumbai, Thane and Mumbai Metropolitan areas alone. Roughly there are 29,000 societies in Mumbai, 6,000 societies in Thane and 5,500 societies in Navi Mumbai and over 2,800 societies in MMR including Panvel.
Some of the societies located in Malabar Hill, Napean Sea Road, Pedder Road in South Mumbai and some of the housing complexes located in suburbs, have a limited member strength, but their maintenance charges per flat are heavy.
Speaking to The Afternoon D&C, Mahendra Mhaske DD-III said that it is mandatory for all such societies to register themselves under GST. Maharashtra Societies Welfare Association (MSWA ) Chairman, Ramesh Prabhu said that earlier the societies were required to pay different type of taxes. But now under this system, the tax structure is expected to be rationalised.
Services provided by government or local authorities to persons other than business entities are exempted from GST. Thus, if property tax or water tax is collected by the CHS on behalf of the BMC from individual flat owners, then GST is not chargeable. Similarly, GST is not chargeable on non-agricultural tax or electricity charges collected under other statutes from individual owners.
By Raju Vernekar