The payment of GST that residents of flat buildings and housing units are required to make to society is frequently unknown to them. Apartment maintenance fees are only one of the many expenses associated with purchasing a home. The owners or tenants of apartments pay these maintenance fees on a monthly or yearly basis to keep their buildings operating and maintained.
Understanding GST on Flat Maintenance Charges
The payments that housing societies or Resident Welfare Associations (RWAs) receive from their inhabitants to pay for the upkeep and management of common spaces and facilities are referred to as flat maintenance charges. These fees usually cover cleaning, security, and upkeep of common areas like playgrounds, lifts, and swimming pools, as well as other necessary services that keep the apartment complex running smoothly.
Circular No.109/28/2019-GST on “Issues related to GST on monthly subscription/contribution charged by a Residential Welfare Association (RWA) from its members” was released by the government on July 22, 2019, to provide clarification on GST rules for apartment maintenance charges. In a housing society or residential complex, the RWA offers a variety of products and services for the mutual benefit of its members, and it also collects GST on maintenance fees.
On July 22, 2019, the Finance Ministry announced that flat owners who contribute more than Rs 7,500 per month to the Residents’ Welfare Association (RWA) would be required to pay GST at the rate of 18%.
According to the Circular, RWAs must collect GST from its members’ monthly membership or contribution if the payment exceeds Rs 7,500 per flat each month and the RWA’s annual revenue from the sale of goods and services surpasses Rs 20 lakhs.
| Aggregate Turnover in FY | Maintenance Charge per member per month | Applicability of GST |
| Upto ₹20 lakh | Upto ₹7500 | Exempt |
| Upto ₹20 lakh | More than ₹7500 | Exempt |
| More than ₹20 Lakh | Upto ₹7500 | Exempt |
| More than ₹20 Lakh | More than ₹7500 | Applicable |
FAQs
Q1. Can the RWA claim an input tax credit of GST paid on inputs and services used for making supplies to its members?
Yes, where the amount charged for such supplies is more than Rs.7,500 per month per member, the ITC would mainly be available on the following:
- Capital goods such as generators, water pumps, lawn furniture, etc.
- Goods such as taps, pipes, other sanitary/hardware fillings, etc.
- Input services, such as repair and maintenance services.
Q2. Are residents, who pay the maintenance charges to the RWA in a housing society, exempt from paying GST?
Yes, maintenance charges paid by residents to the Resident Welfare Association are exempt up to Rs.7,500. In case the amount charged exceeds Rs.7,500 per month per member, GST is chargeable on the entire amount charged.
Q3. Is the exemption available where flats are occupied for commercial use?
Yes, the exemption is available even when flats are occupied for commercial use since they qualify as members of the RWA. How the members use the apartments is not relevant.
Thus, it can be concluded that GST is chargeable only where both cases are satisfied:
- The amount of maintenance charges is more than Rs.7,500 per month per member.
- The aggregate turnover of the RWA is Rs.20 lakh (or Rs.40 lakh or Rs.10 lakh, as applicable) or more in the financial year.
Q4. What is the GST rate applicable on maintenance charges?
18% is the GST rate on maintenance charges if the monthly charge exceeds Rs.7,500 per member
Q5. Are there any penalties for non-compliance with GST rules by housing societies?
Non-compliance with GST rules can result in penalties as prescribed under the CGST Act, including fines and interest on unpaid taxes.
Q6. Is GST applicable on parking fees and other additional services provided by the society?
Yes, parking fees and other additional services are taxable under GST at 18% if they qualify as taxable services.
Q7. What type of expenses are included in maintenance charges for GST calculation?
Maintenance charges include cleaning, security, gardening, repairs, and upkeep of shared facilities.
