GST on Apartment Maintenance: CBIC Issues Clarification

The Central Board of Indirect Taxes and Customs (CBIC) has issued a new clarification about levying Goods and Services Tax (GST) on apartment maintenance fees as part of an attempt to eliminate ambiguity in the minds of the dwellers and housing complexes.

At the CBIC, if a housing society’s collection towards maintenance for the whole year is more than ₹20 lakh and all members are being charged more than ₹7,500 a month, then 18% GST will be charged, and that’s going to be charged on the whole, not just the excess.

For example, if the resident is required to pay ₹9,000 every month as maintenance, the entire ₹9,000 will be charged 18% GST and not ₹1,500 over ₹7,500. This clarification says the GST will be charged on the whole amount once the two conditions, ₹7,500 monthly per member and ₹20 lakh annual turnover, are fulfilled.

Notably, this is not a fresh tax. GST on flat maintenance charges has been in place since 2019. The clarification was required only because there were constant doubts over whether the tax was to be levied on the amount exceeding ₹7,500 or the entire amount after crossing the limit.

Dwellers whose monthly maintenance charges are less than ₹7,500, or housing societies with collections of less than ₹20 lakh per year, are exempt from GST. In such situations, no GST is levied, reaffirmed by the CBIC.

This step is likely to provide further clarity to Resident Welfare Associations (RWAs) and apartment owners, who were in the dark regarding their tax liability. It also reiterates the significance of recording total collection over a year and individual contributions to ascertain the tax liability.

The clarification is a reminder for housing societies to keep proper records and comply with GST norms to avoid fines or backdated tax imposition.