GST on society maintenance charges: the ₹7,500 rule, explained

The short answer

Most small societies and apartment associations are below at least one of those limits, so their bills carry no GST at all.

The ₹7,500 per flat limit

Maintenance a society collects from its own members for common services is exempt from GST up to ₹7,500 per member per month. The exemption sits in Notification 12/2017-Central Tax (Rate). It started at ₹5,000 and was raised to ₹7,500 from 25 January 2018.

The limit applies to each flat separately. Someone who owns two flats in the same society is treated as a member for each, so two bills of ₹6,000 are both exempt.

The ₹20 lakh turnover test

A society only has to register for GST when its aggregate turnover crosses ₹20 lakh a year (₹10 lakh in a few special category states). CBIC Circular 109/28/2019-GST confirms that a society under the threshold does not need to register or charge GST, even if some flats pay more than ₹7,500 a month.

What is left out when checking ₹7,500

Property tax, electricity charges and other statutory dues that the society collects only to pay on members' behalf are excluded when checking the limit. Count the charges for common services: security, housekeeping, repairs, sinking fund, common electricity and the like.

Whole amount or only the excess?

The circular says that once a flat's charge goes above ₹7,500, GST applies to the entire amount. A charge of ₹9,000 is taxed on ₹9,000, not ₹1,500.

On 1 July 2021, a single judge of the Madras High Court disagreed in Greenwood Owners Association v Union of India, holding that only the amount above ₹7,500 is taxable, and set the circular aside on this point. The government appealed, and on 7 October 2021 a division bench stayed that part of the order. As of our last check, the appeal had not been decided, so the circular is what most societies and their auditors follow.

Worked examples

A ₹6,000 bill

Under ₹7,500. No GST, whatever the society's size.

A ₹9,000 bill in a society with ₹45 lakh turnover

Maintenance

₹9,000

GST at 18% on the full amount

₹1,620

Bill

₹10,620

On the excess-only reading of the Madras High Court judgment, the GST would be 18% of ₹1,500, which is ₹270.

A ₹9,000 bill that includes ₹1,800 of property tax and electricity

Total bill

₹9,000

Less property tax and electricity

₹1,800

Counted towards ₹7,500

₹7,200

₹7,200 is under the limit, so no GST. Run your own numbers in the GST check on the maintenance calculator.

Maintenance collected by the builder

The ₹7,500 exemption is for a society or residents' association collecting from its own members. Maintenance a builder collects before handing the building over to the society is generally a taxable service at 18%, without the ₹7,500 exemption.

If your society is registered for GST

• Bills for taxable flats must be tax invoices with the society's GSTIN, showing CGST and SGST separately.
• The society files GST returns, even in months with little activity.
• It can claim input tax credit on GST paid for goods and services used for the building, such as generators, pumps and repairs, as the circular confirms.

Aangan's Federation plan includes GST invoices and a Tally export. For everything else about bills, see our guide to society maintenance charges.

Sources

• Notification 12/2017-Central Tax (Rate), as amended by Notification 2/2018-Central Tax (Rate) from 25 January 2018.
• CBIC Circular 109/28/2019-GST, 22 July 2019, on GST on charges collected by Residential Welfare Associations.
• Greenwood Owners Association v Union of India, Madras High Court, 1 July 2021, and the division bench stay of 7 October 2021.