GST on CO-OP. SOC.
OFFICE BEARERS OF CHS. I AM QUITE SURE THIS MAIL WILL BE OF INTEREST TO YOU .
GST Insight and applicability of GST on Co-op Hsg Societies-
Why Maharashtra Housing Society is covered under GST
GST is applicable to the dealer-person who is rendering the service or supplying the goods in its regular course of business activity.
Person has been defined under 2(84) as follow:-
“person” includes— (a) an individual; (b) a Hindu Undivided Family; (c) a company; (d) a firm; (e) a Limited Liability Partnership; (f) an association of persons or a body of individuals, whether incorporated or not, in India or outside India; (g) any corporation established by or under any Central Act, State Act or Provincial Act or a Government company as defined in clause (45) of section 2 of the Companies Act, 2013; (h) anybody corporate incorporated by or under the laws of a country outside India; (i) a co-operative society registered under any law relating to co-operative societies; j) a local authority; (k) Central Government or a State Government; (l) society as defined under the Societies Registration Act, 1860; (m) trust; and (n) every artificial juridical person, not falling within any of the above.
From this it can be noted that under clause (i) a co-operative housing society will be covered.
Can the activities of housing Societies be considered as “Business Activity”?
The term business has been defined under Section 2(17) as follow:- “business” includes–– (a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit; (b) any activity or transaction in connection with or incidental or ancillary to sub-clause (a); (c) any activity or transaction in the nature of sub-clause (a), whether or not there is volume, frequency, continuity or regularity of such transaction; (d) supply or acquisition of goods including capital goods and services in connection with commencement or closure of business; (e) 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; (f) admission, for a consideration, of persons to any premises; (g) services supplied by a person as the holder of an office which has been accepted by him in the course or furtherance of his trade, profession or vocation; (h) services provided by a race club by way of totalisator or a license to book maker in such club ; and (i) any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities;
The above clause (e) specifically covered a Society, thus the housing society will be considered as carrying out activities in furtherance of business and will be liable for Registration under GST.
The “reverse charges” has been define u/s 2(98) as “reverse charge” means the liability to pay tax by the recipient of supply of goods or services or both instead of the supplier of such goods or services or both under sub-section (3) or sub-section (4) of section 9, or under sub-section (3) or subsection (4) of section 5 of the Integrated Goods and Services Tax Act.
Thus, under the following cases the Recipient must pay the required GST
1) Any transaction notified by the Government, as on date nothing has been notified but likely it may be for a) Transport payment b) Lawyer Professional Fees c) Security Payment d) Payment where people are providing labour, etc.
2) Obtaining goods / services from UNREGISTERED DEALER.
The recipient will have to prepare an Invoice in such circumstances and pay the tax to government and prepare Payment Voucher
ALL persons liable to pay tax under Reverse Charges will have to be registered themselves under the act irrespective of their liabilities on basis of Turnover. In all probabilities, most of even small societies may be coming for registration under this provision of section 24(iii) and (iv)
Summary of above Act and Few Queries-
1) Whether the Maharashtra Housing Society will be covered under GST ?
Answer is YES
2) Whether any exemption is available on basis of turnover?
a) If the Society’s aggregate receipt of turnover is less than ₹ 20,00,000 it will not be liable for Registration and tax collection.
b) If the Society’s aggregate receipt of turnover is more than ₹ 20,00,000 but less than ₹ 50,00,000 and does not desired to claim any tax credit on its expenses paid GST it can go for Composition Scheme under Section 10.
c) If the Society’s aggregate receipt of turnover is more than ₹ 50,00,000 it will be fully covered like any other business entity.
3) Will the Billing format of the Society will have to be changed ?
Yes, the format will have to be changed and it will be changed as format to be notified.
4) Will the method of accounting have to be changed?
Yes, now as the tax paid on the expense side is available under specific scenario, the party-wise details have to be uploaded and the work being done with various type of online / offline programs will undergo a major change to provide for recording detailed expenses in lieu of recording transactions as being done presently, whereby few society are paying collecting and paying taxes inefficiently increasing the cascading effects.
5) Will the Input tax Credit be available on all the expenses incurred by the Society ?
On following expenses where the taxes are paid No Input tax Credit will be available, i.e.
a) Electricity Expenses
b) Stamp Duty
c) Property Tax
6) Will the reverse charge mechanism applicable to the Society?
On certain transaction, it’s expected that reverse charge mechanism will be applicable and accordingly the GST will have to be paid first and then the Credit may be claimed. Details provided in Annexure “D”.
Under GST, all dealers including a Society will have to file 3 returns in a month for each and every transaction on the billing side on 10th of following month and on expenses side on 15th of following month and consolidated return on 20th of following month and an Annual Return has to be filled. Thus in all 37 returns will have to be filled.
Other than these, if they deduct TDS then they will have to also filed GSTR-7 by 10th of the following month.
However, certain societies may fall under quarterly return if they have opted for Composition Scheme by forfeiting all the Credit on expenses and willing to pay tax on receipts. Composition Scheme is not dealt with over here as it requires a separate approach.
7) Will a Separate Audit be required under GST?
Yes, if the turnover exceeds prescribed limit. Thus, in effect there may be minimum 3 audit as follow: –
a) Statutory Audit
b) GST Audit
c) Income Tax Audit
8) On what amount GST must be paid?
GST is payable on consideration, which has been defined under section 2(31) of the CGST and state law have been requested to follow and align their laws in line with CGST. Thus, it is assumed at this moment that it will be the same. Consideration includes not only amount receivable for an activity but also monetary consideration for agreeing to refrain from an activity.
However, it’s provided that a deposit given in respect of the supply of goods or services or both shall not be considered as payment made for such supply unless the supplier applies such deposit as consideration for the said supply . That means on deposit there will be no GST, unless supply and / or service is made against that deposit.
FOR CO OP. SOC. RESIDENTS USERS & WELFARE ASSOCIATION (REGD).
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FREE ADVICE TILL 31-5-2017 TO CHS LTD.
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Mumbai, 3rd April, 2017:
Unknown to most Mumbaikars, BMC issued a circular last month giving notice that the Capital Valuation for the forthcoming years has been completed for fixing up property tax applicable to property owners and that “they will be available for inspection at the office of the Asstt. Assessor and Collector in the respective wards… between 23rd March 2017 to 13th April 2017.” It added that “complaints against the Capital Values… must be made in writing by the property owners themselves or by the persons duly authorized by them under a power of attorney.”
BMC’s notice may be downloaded from this link: http://bit.ly/MCGM-Notice-23-3-2017
Sometimes, the assessment department makes mistakes in fixing the capital value, which results in huge disputed dues. If the window of opportunity given under the circular is not promptly availed, then property owners such as housing societies are left with the costly option of going to small causes court against excessive billing.
It is quite easy to verify the capital valuation from BMC’s website (https://prcvs.mcgm.gov.in/ ), by entering the Property Tax Account Number and other details. However, it is difficult to draft a proper complaint in case of mistakes in capital valuation are discovered. To assist Cooperative Housing Societies in exercising this right, Andheri-based NGO Maharashtra Societies Welfare Association (MSWA) has created a downloadable format with the help of Property Tax Department insiders.
Download the complaint format from:
In case, the capital valuation of their property is excessive, office-bearers of housing societies may download this useful format, fill it up and submit it before 13th April 2017.
CA Ramesh Prabhu, chairman of MSWA, remarked, “It is unfair that only three weeks time is given to citizens for verifying the new capital valuations, on the basis of which lakhs of rupees are charged to more than 30,000 cooperative housing societies and other property owners. Butwe will do whatever we can to facilitate citizens of Mumbai to respond to this circular,” he said. Mr Prabhu appealed to office-bearers of housing societies to take the circular seriously, as the impact of wrong valuation be lakhs of rupees.
Housing societies may contact MSWA’s helpline number 022-42551414 and also Whatsapp no. 70455 99702. MSWA Members will receive free-of-charge assistance in assessment of valuation, submission of this complaint and follow-up.
- The urban cooperative banks, cooperative financial institutions, Patpedhis (credit cooperative societies) and other cooperative societies, which are registered under the Maharashtra Cooperative Societies Act 1960, are not public authorities within the meaning of Section 2(h) of the Right to Information Act.
- These institutions stand exempted from disclosure of information u/s 8)1 (d), (e) and (j) of the Right to Information Act
- That the court issue a writ, order or direction restraining the officers of the cooperative department from supplying any information to the members or general public which is, according to the said societies, confidential in nature.
- The court, pending the hearing and final decision of the writ petition, restrain the respondent from disclosing any information other than the balance sheet and profit and loss accounts of the cooperative societies, urban banks and Patpedhis to the general public under Right to Information Act.
- Cooperative institutions are bodies created by the statute. But right from the registration till the liquidation there is control over these institutions by the authority created under the same Act. The authority steps in to take decisions on the rights of the members. The authority has control over the manner in which funds are invested or over the distribution of the funds. Such institutions cannot act independently and the apex bodies are created for such institutions.
- Even Articles 38,39,43 and 48 of the Directive Principles of State Policy of the Constitution show that to some extent such institutions are discharging the duty of the State
- The provisions of the Maharashtra Cooperative Societies Act show that the authority under the Act can do the audit and inquire into irregularities. If loss is caused to the institution, by the directors, promoters etc., the authority can assess the damage, and the loss caused to the institution can be recovered from those persons. Under the Act, the authority can suspend the managing committee and remove its members. For all these and other purposes mentioned in the Cooperative Societies Act, the cooperative institution is bound to supply the record to the authority.
- The provisions of the Maharashtra Cooperative Societies Act, if read with the definition of information given in Section 2(f) of the Act, makes it clear that everything which is mentioned in the definition of information needs to be supplied by the cooperative institution to the authority created under the Cooperative Societies Act. The definition of ‘Public Authority’ given in Section 2(h) shows that such public authority can be created by any law made by the State Legislature. It is already observed that the officers like Registrar and his subordinate officers are appointed under the Cooperative Societies Act.
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