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The clarification comes as housing societies throughout the nation witness rising panic and debate, particularly on social media and in neighborhood conferences. As per a NDTV Revenue report, the Central Board of Oblique Taxes and Customs (CBIC) had, in 2019, directed that flat house owners should pay 18 per cent GST on upkeep fees if the quantity paid to their Resident Welfare Affiliation (RWA) exceeds Rs 7,500 monthly.
This has been a long-standing rule, but it surely has just lately come again into the highlight on account of stricter compliance efforts by tax officers.
Nonetheless, a 2021 ruling by the Madras Excessive Court docket introduced some reduction. The court docket dominated that GST must be charged solely on the portion of the upkeep quantity that exceeds Rs 7,500 — not on the complete quantity.
This ruling successfully overruled a 2019 round issued by the CBIC and a choice by the Authority for Advance Rulings (AAR), which had acknowledged that if the month-to-month fees exceeded Rs 7,500, then GST would apply on your complete quantity, and never simply the surplus.
Importantly, the tax division has not appealed the Madras Excessive Court docket judgment in any larger court docket to date. This implies the ruling stands, but it surely will not be adopted uniformly throughout all states. Some tax authorities should select to go by the unique CBIC interpretation, the report stated.
Presently, RWAs are required to gather 18 per cent GST on month-to-month upkeep fees provided that two particular circumstances are met: the per-apartment month-to-month upkeep exceeds Rs 7,500, and the society’s annual turnover is greater than Rs 20 lakh.
If each these circumstances apply, then the housing society should register underneath GST and cost tax on your complete upkeep quantity, it added. The report additionally stated that many condominium complexes in large cities are nonetheless not following this rule. In consequence, the tax division is now urging RWAs to conform and guarantee correct tax funds.
