CALCULATION OF CONSTRUCTION AREA, CONSIDERING CARPET AREA ACCORDING TO RERA ACT

Outward No: Ka.15/Circular/RERA/
Carpet Area/3.
Office of the Inspector General
of Registration & Stamp Controller,
Maharashtra State, Pune-1.
Date : 02/01/2018.

Circular

Sub: Guidelines No. 5 for Mumbai City and Guidelines No.4 For rest of Maharashtra

1.2 ratio has been mentioned in guidelines no.5  for Mumbai City and No.4 for rest of Maharashtra  in respect of calculating built up area from carpet area in the guidelines with annual valuation rate table.

The Maharashtra Real Estate Regulatory. Authority has issued Circular No.4/2017, Dt. 14/6/2017 regarding calculation of carpet area under Section 2(k) of Real Estate (Regulation & Development). With it they have given illustrative sketches regarding which area to be included in carpet and which not to be included. -Accordingly  it is necessary to include area of inner walls of the flat in carpet area. It is mentioned that area  covered by the external walls, and similarlyareas  under services shafts,  exclusive balcony or verandah area and exclusive open terrace area shall not be included. Incidental to said changes individual memorandums and also memorandums from CREDAI regarding making changes in valuation guidelines were received.  Therefore it is necessary.to make changes in the ratio calculating carpet area from built area. Thus, following changes have been made in guidelines no.5 for Mumbai City and guidelines no.4 for rest of Maharashtra.

CarpetArea/Built up Area :-  

  1. The rate mentioned in annual, valuation rate are of built up area. If documents mentioned Carpet area, then valuation should be made by drawing built up area as follows :

Built up area = 1.1 x Carpet area or Carpet area = Built up area / 1.1

However if there is any other mentioned other than Carpet area and if the said area is more than Carpet area x 1.1 then, valuation should be made by considering the area mentioned in the documents. However in the case of open   parking, terrace and balcony, only mentioned area should be considered.

  1. Valuation of closed balcony adjacent to the flats/offices/shops/industrial properties should be made with sales price of the respective use of concerned annual valuation rate table.
  2.  If open balcony adjacent to the Flats/ Offices/ Shops/Industrial use is shown in documents and plans with it , then its.valuation should be made at the rate of 40% of the sale price of respective use shown in annual valuation rate          according to Instruction No.15 for Mumbai and Instruction No. 14 for rest of Maharashtra.
  3. Hereinbefore since area under all walls in the flats sold was not incorporated in carpet area, for the sale/agreement of such resale flats, earlier 1.2 ratio should be used for calculating built up area according to carpet area with balcony area.  However if there is mention of built up area or saleable area except carpet area in the document, then that area should be considered directly. The ratio 1.2 should not be applied to it.

The said Circular shall be came into force from the date of issue.

The copy of the said Circular is available on the web site www.igrmaharashtra.gov.in

(Anil Kavade)

Inspector General of Registration & Controller of Stamps, Maharashtra State, Pune.

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Respite for co-op housing complexes under GST net

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

http://www.afternoondc.in/epaper/EpaperPost.aspx?id=214694

Bhagtani – Jaycee Court Proceedings

DO U AGREE WITH BELOW MENTIONED SUBMISSIONS IS IT NOT SHAMEFUL FOR MCHI TO HAVE SUCH PERSONS AS OFFICE BEARERS/MANAGING COMMITTEE MEMBERS? Mumbai, 29th September, 2017: The hopes of hundreds of victims of Bhagtani builders ill-fated Riyo project in Mira Road today when Justice Revati Mohite Dere of Bombay High Court gave a strict order requiring Dipesh, Mukesh and Lakshman Bhagtani to pay back Rs 22 crore to the victims within 6 months, as a pre-condition for their anticipatory bail.

Click here to read today’s order in Criminal Anticipatory Bail Application no. 1553 of 2017, wherein there were roughly 175 interveners in four Criminal Applications (CA no. 862, 882, 901 and 910 of 2017).

 

MAIN POINTS IN TODAY’S ORDER:

1) Counsel for Bhagtani builders was forced to undertake that (a) the builders will deposit Rs.22 crores (as per the judge’s directions on 15th Sept), in 6 equal installments, within six months from today (b) that the first installment will be deposited on or before 12th October, 2017 and (c) the balance 5 installments, thereafter, within one month each and (d) if there is a single default, the protection can be vacated. (e) An affidavit-cum-undertaking of the Bhagtanis stating the above is to be submitted on Tuesday, 3rd October.

2) One of the counsels for interveners pointed out that in addition to the above-mentioned list given by the police Investigating Officer, there were other 18 investors, and that he was in the process of filing an intervention application. Their amount would be an additional Rs.3-4 crores.

3) Mr Mundargi (counsel for Bhagtani builders) stated that the builders were ready to deposit the additional amount of the additional investors who are not included in the list tendered by him today, after the list and the amounts are verified.

4) The matter is now “stood over” to 3rd October, 2017 at 3.00 p.m, for tendering the affidavit-cum-undertaking of the applicants.

5) Interim protection (i.e. protection from arrest) granted earlier to continue till the next date i.e. 13th October.

 

IMPORTANT POINTS MENTIONED ORALLY IN TODAY’S PROCEEDINGS:

a) The Investigating Officer said in response to a question that Dipesh and Mukesh Bhagtani are in India. (Dipesh was on the court premises, it seems, though not in the courtroom. The whereabouts of Lakshman Bhagtani were not discussed.)

b) With reference to another another anticipatory bail application (ABA no. 1725 of 2017) filed yesterday by Bhagtani builders for protection in the case of an FIR u/s IPC sections 420, 120(B) and 34, and MOFA sections 3, 4, 5, 6, 13 and 14, Justice Mohite Dere asked why multiple agencies (i.e. Santa Cruz police station and EOW) were involved in filing FIRs on the same topic. Hence, EOW is directed to take all cases in this matter (i.e. Riyo in particular, and Bhagtani builders in general).Aggrieved Bhagtani investors, in future, please go to EOW and Santa Cruz and register FIRs.

c) It is felt that allottees should not deposit any Post Dated Cheques (PDCs) that may be in their possession. Otherwise, it will be seen as trying to take double payment from Bhagtanis.

 

THE BIG MESSAGE FROM TODAY’S PROCEEDINGS:Many FIRs have been registered by Bhagtani’s victims, and they will come up before Bombay High Court soon. The Bhagtani scam will now make headlines, and the tide will turn against them and in favour of their victims. Bhagtani victims from Sapphire, Savannah, Serenity and other projects should now gather courage to go and file FIR immediately with EOW. Join the tidal wave of Bhagtani victims fighting for their rights!

SHARED IN PUBLIC INTEREST BY
Adv Vinod Sampat

To WITHDRAW the GST applied on the co-operative housing soc. maintenance payments

As we know that 18% GST is made applicable on the maintenance payment made by very own members of the cooperative housing society to the same co-operative housing society managed by the same members themselves. I feel that this decision of the Government is not in line with the basic concept and principles of co-operative housing societies in India.

Hence, through this PIL, I appeal to Honorable Supreme Court of India to withdraw the GST (Goods and Service Tax ) applied by the Government of India on the Maintenance Payment made by very own members of the cooperative housing society to the same co-operative housing society managed by the same members of the housing society themselves. There are following valid questions to be considered before making GST applicable to the maintenance payment of the flats / house in Co-operative Housing societies:

1.   The Co-Operative Housing / Residential societies in India are maintained by the very own members of these co-operative societies. These members of the societies come forward voluntarily to serve themselves through their own services to their own flats / houses in the society. These members are neither paid any salary nor monitory benefits for their services provided by them to themselves in the co-operative societies. Meaning, members are providing their own services to themselves. So, if I am providing the service to me and that service is also consumed by me only, then why should I pay the GST tax on it to the Government for the same?

 

2.   The concept of co-operative for the housing societies is to manage the society by its members themselves, meaning there are no two distinct bodies i.e. Separate giver of services and separate receiver of the services do not exist in co-operative housing societies. It’s a one body like left leg supporting right leg and vice-versa to lift the entire load of the one body. Where is the concept of delivery of services within one body fit into this mechanism?

 

3.   Why the maintenance of the houses / flats in the co-operative societies is considered as a Business? Any logic behind it?

 

4.   We, as a resident members of the co-operative Housing society are already paying the Property Taxes on our house / flat to the Municipal Corporations, which is almost in the range of 20% to 100% of our annual maintenance. Then why are these property taxes levied on the flats if GST is also levied? Then withdraw property tax on flats.

 

5.   Co-operative societies being the end point of consumption of the material or services from the outside vendors, the materials and the services used by the co-operative societies from the outside agencies / vendors are already charged with GST and are paid by the co-operative societies and these vendors in tern pay these taxes to the Government. The final amount with GST is charged to the maintenance of the members flat within the society for such services obtained from outside. Where is the question of charging of GST to members’ come into this picture? Do the government expect us   again to charge GST of 18% on the same services to the members??

 

6.   When the members purchase the house / flat in the co-operative society, then they already pay or paid the following taxes/ duties to the State Government on the Agreement Purchase value of the flat/house in Pre-GST era.

1.   Stamp duty (6% in Maharashtra)

2.    Registration charges (Rs.30,000/-)

3.   Service tax (4 % in Maharashtra)

4.   VAT (1%).

The above taxes are almost amounting 12% of the Agreement Value. Means, State and Central Government has already earned their taxes through the purchase of the house.

The same is applicable for the purchase of the house after GST and the total taxes would be increased to huge amount of 18% GST on the Agreement / Purchase Value. We, as an individual members are paying 18% GST for the purchase of the house and we cannot claim any refund of the same.

Meaning, the State and Central Government has already earned their taxes, then why do Government want to put the GST (18%) on the maintenance of these property? What is the Government Role in maintaining these properties which are fully maintained and by the members themselves? Is government giving any insurance to these co-operative societies in return?

7.   GST is being charged on the Sinking Fund and Repair fund as well, it means more and more we save in the sinking fund for our own security of the house to re-build it in future in case of any calamities or in case of fire or in case of earthquake, we need to pay more and more taxes to government. Is government taking the responsibilities of the re-building of our houses / flats in the co-operative societies in case they are damaged, gutted in fire, or in earthquake or need to re-develop in future due to lack of original construction quality through the GST paid on these amounts??

 

 

 

8.   Moreover, most of the members of these co-operative societies are the tax payers i.e. they file their own returns on their taxable income every year. The net amount leftover after paying the direct tax on the income is used to take care of household expenses one of which is the payment of the maintenance of the house/flat in the society. Is government giving refund claims to the members for the GST paid on the house maintenance into their direct taxes??

 

 

9.   Why is the limit of GST applicability fixed to the maintenance amount of Rs.5000/- and above. What is the logic behind it?

 

10.       Why the limit of collection below 20 lacs per annum is fixed for this? Is maintaining the Co-operative societies considered as a Business?? We are not running the business of maintaining the houses / flats, we are maintaining the houses / flats on our own to live in the better condition same as we maintain our body to live in the good health condition with the co-operations of our own body parts. Why is the business approach forced on the working or maintaining of the co-operative societies by putting the collection limits of 20 lacs?

 

 

 

11.       By applying GST on co-operative societies, is government just  trying to make more money through the hard earned money of the citizens maintaining their own houses by their own in cooperative housing societies?

 

To my notice, the government has not considered most of the points listed above before applying the GST on maintenance payment made by members to co-operative housing societies managed by themselves. There is no valid logic to apply GST on maintenance payment by the members to the cooperative housing society.

Hence, I request and appeal to Honorable Supreme Court of India through this PUBLIC INTEREST LITIGATION (PIL) to consider to WITHDRAW the GST applied on the maintenance payment made by the very own members of the cooperative society to the same co-operative society managed by the  members of the same cooperative housing society themselves.

I request to provide the  stay on the applicability of GST on the Maintenance Payment of the Cooperative Housing societies till the final verdict from Supreme Court of India is given on this PIL.

 

This petition will be delivered to:

  • Chief Justice of India

Click Here to Support and sign the petition

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GST for Housing Societies Issues .& Challenges

Government of India is pushing for Implementation of GST on the 1″ of July 2017. In the latest GST Council .meeting held on the 3rd of June 2017, all the States have also agreed to the implementation date as it of July 2017.

Since GST deals with all sorts of goods and . services, manufacture, import, export, trade, etc. while addressing the requirements of the specific sector of Housing Societies , many practical issues arise and are not addressed properly.

This article is an attempt to understand these constraints.

1. Registration : Every Society with an aggregate turnover of over Rs 20 lakhs is required to be registered under GST. The aggregate turnover includes all maintenance charges (Other- than Municipal Tax), any miscellaneous income, and includes Bank interests.

Further, every society engaging an advocate or an advocate firm, needs, to register. under GST , even if the aggregate turnover, is less than Rs 20 lakhs, since Advocate Services is categorized under Reverse Charge.

While a simple window of  “Composite Levy” is available for Manufacturing/ Trading Sectors, the same is not available to Housing Society Sector.

2. Exemption: Payment of Municipal Tax may be considered as Payment on behalf of Member as an Agent, and maybe treated as outside the purview of GST and hence not taxable.

Water charges, may be treated as Supply of Goods, and hence attracts GST at “zero %” as per the GST Rate table.

Members in a GST Registered Society are exempted and will not be charged GST, if the maintenance charges on “Charges”/ Contributions” are less than Rs 5000 per month. Here, only ‘Charges for “Sourcing’ of goods or services from third party, for the common use” are to be considered. Thus, while ‘water charges, electricity charges, service charges, repair fund / maintenance charges, insurance premium, etc, are included while calculating the amount of Rs 5000/-, vehicle parking charges, non _occupancy charges, share transfer premium, hall booking charges and similar other charges are not included.

The challenge for a housing society is to identify the members for application of GST and also identification of billing heads for considering the limit of Rs 5000/-.

Also it is not clear whether for a member who is not in the exemption category, GST is to be charged on the amount exceeding this limit or for the entire amount. Going by Service Tax provisions, from which the exemption criteria is picked, GST is to be applied on the entire amount and not on the amount exceeding Rs 5000/-.

3. Invoicing : GST provisions require that Taxable and Exempt amounts must not be included in the same invoice. For Taxable amounts, tax invoice has to be issued, and for exempt amounts, bill of supply has to be issued.

4. Arrears : Even if a member has not made the payment, the GST charged to the member must be paid. Interest on arrears also attracts GST. Even this has to be paid once interest bill is raised on the member. Arrears problem itself is a challenge to Housing Societies.

5. Advances : GST has to be paid on the Advance Maintenance Charges Received; and adjusted against the invoice. when raised later. To distinguish the Advance against Taxable and Non taxable amount, and to calculate the GST on the same, keep a track of the same month after month is again a challenge.

6. Reverse Charge:  On certain services, in particular for Services by an Advocate, GST will not be charged by the Supplier, But the GST has to be calculated and paid to the Govt. by the Society. Similarly, if the Society is procuring Services from any Unregistered Vendor, [ which is very common for Housing Societies], GST has to be calculated and paid by the Society. The GST rate may change from Vendor to Vendor depending on the kind of Supply [ service or Goods] , and its category. Again , since the invoice does not reveal the GST rate, it is again a challenge to know the GST rate for each category and pay.

7. Input Tax Credit : The Societies are allowed to avail Input Credits on GST paid by them to the various Vendors or through Reverse Charge. [ In case of Reverse Charge, the credit is available only in the month next in which GST is-paid: ] . Again, if the Vendor has not made the payment of the GST before the due date, the ITC availed by the Society will be reversed by the GSTN

Input Tax on Capital Goods [Fixed Assets] is adjustable over a period of five years. To keep a track of this is a challenge.

If the Society has all its members under the exempt category, then the entire ITC, that are
attributable to exempt services will not be available. If the Society does not have any member under the exempt category, all the input Tax is available is ITC. However, where there is a mix of these two kinds,-the situation becomes challenging. Only proportionate Input Tax is available. for ITC. This proportion is required to be calculated every month and applied accordingly

8.Accounting: Most of the Accountants book expenditure directly without creating any vendor. Under GST, every Invoice has to be booked first, and then payment made against this invoice is required to be accounted: The Voucher posting work of the Accountant increases almost three fold.

9 Rectification of the Accounting Entries: Since all the rectifications in accounting entries.made are ‘required to be reported in subsequent Reports, of GST, one has to keep a track of the rectifications done.

10. GSTN : All GST related issues [Reports and Payments] are handled through an online application GSTN. For making payments, one has to download a challan and make the payment online or through any authroised Bank. Many Societies do not even have Computers and transactions online itself becomes a Challenge.

11 Reports : This becomes the most challenging part. Most of the Societies do not have any full time Accountant. But the requirement of Reports is very much time bound. GSTR -1 is required to he filed on or before 10th of each month. GSTR-2 is required to be filed on or before 15th of each month, Between 15th and 17th of each month, one has to tally the GSTR- 1 of the input Supplier with our GSTR-2 , and ensure that the two match each other By 20th one has to pay the Tax, and Submit the Tax return in GSTR- 3.

In addition, there will be GSTR- 9 , an Annual Return and GSTR – 9B [ GSTR Audit Report, if the aggregate turnover, exceeds Rs 1 Cr ] to be filed on .or before 31st of December. This will reconcile the GST-payments vis-a-vis the audited statement of accounts, of the Society.

The compliance requirement of GST is very high. For very big societies, the cost increase is shared by a larger number of members. But for smaller societies, the cost increase becomes a very high burden on,the members. But this should not be a reason for not complying with the GST requirements. Since the invoices raised by Registered Suppliers on Unregistered persons are all uploaded in the GSTN, the chances of getting detected, if not Registered, is very high. While interest and penalty will be charged on the detected evaded tax, input Tax credit, including the One on Reverse Tax basis, which May be a very huge, will not be available.

ABOUT THE AUTHOR – Mohanraj Yenagudde is a the Director of a Leading Company providing Billing / Accounts / Management / Consultancy and _Compliance Services under the name Society123 Support Services Pvt Ltd (Formerly Pangal Computer Services Pvt Ltd) to Housing Societies. for the last thirty years. Ph:- 9820090808 email : Mohanraj@society123.com

Courtesy : MSWA’s Housing Societies Review – August 2017