GST On Maintenance Charges Of Flats : Know Everything
GST on Maintenance Charges for Flats: Everything You Need to Know
Are you living in an apartment of a housing complex, you might be paying maintenance charges for the upkeep of your building. Do you know that these maintenance charges sometimes include GST (Goods and Service Tax). Today, we will explain you in what cases you have to pay GST on maintenance charges of flats, including the law, how it is calculated, and the exemptions.
What is Maintenance Charge on a Flat?
But before we talk about GST, let’s first understand what is maintenance charge on a flat. Maintenance charges is a type of fees flat owners pay to keep their common spaces and amenities serviced and clean.
These charges cover the cost of services like cleaning, gardening, security, repair work, and maintenance of common amenities like lifts, parking areas, and clubhouses. These charges vary in different projects and as per the sizes of the apartments. Maintenance charges are levied monthly or in some societies quarterly too.
GST on Maintenance Charges of Flats
In recent years, the GST on maintenance charges of flats has become a hot topic. The Goods and Services Tax (GST) is a tax that is levied on various services and goods across India. Housing societies and apartment owners may be required to pay GST on the maintenance charges of flats, depending on certain conditions.
When is GST applicable?
According to a circular released by the Finance Ministry on July 22, 2019, GST is applicable on maintenance charges if:
• The housing society's annual turnover exceeds Rs. 20 lakh.
• The monthly maintenance charges per member exceed Rs. 7,500.
If both these conditions are met, GST will be levied on the maintenance charges on flats at a rate of 18%.
What is the GST Exemption?
The exemption from GST on maintenance fees is only allowed if the annual turnover of a society exceeds 20 lakhs or the monthly maintenance charge is more than 7500 hundreds monthly.
Now suppose if your monthly maintenance charge is less than 7500 hundred or equal to this amount, and the annual turnover exceeds 20 lakhs, even in that case, GST will not be applicable there.
Special States Exemption: In some states like Kashmir, Himachal Pradesh, and Uttarakhand, the turnover limit for GST exemption is Rs. 10 lakh instead of Rs. 20 lakh.
How is Maintenance Charge for Flats Calculated?
• Total Maintenance Charges: Monthly maintenance for two flats is Rs. 15,000.
• GST Application: GST applies to the entire Rs. 15,000 amount.
• GST Rate: GST is charged at 18% on Rs. 15,000.
• GST Amount: 18% of Rs. 15,000 equals Rs. 2,700.
• Waived GST: GST is waived on Rs. 15,000 for two flats.
Which Expenses Are Included in Maintenance Charges?
When it comes to GST on maintenance charges of flats, there are certain expenses that are included or excluded from the calculation. Here’s a breakdown:
Included Expenses
These expenses are subject to GST and are included in the calculation of maintenance charges:
• Property Tax on Common Areas
• Sinking Fund (for future repairs)
• Water Charges for Common Areas
• Charges for Common Services like Clubhouses, Lifts, and Swimming Pools
• Charges for the use of common spaces
Excluded Expenses
Certain individual expenses are not included in the maintenance charges and are not subject to GST:
• Property Tax for Private Spaces (e.g., individual flats)
• Parking Charges
• Non-Occupancy Charges
• Water Charges for Individual Units
• Share Transfer Fees
• Interest on Default Payments
What Happens if GST is Charged on Maintenance Charges?
If GST is charged on the maintenance charges on flats, it will be added to your monthly or annual bill. For example, if your flat’s maintenance charge is Rs. 10,000, and GST at 18% is applicable, your total maintenance charge will be Rs. 11,800.
Input Tax Credits for Housing Societies
Housing societies can also claim GST input tax credits (ITC) on goods and services they purchase. This includes credits for services like repairs, maintenance, security, and lift operations.
However, the society cannot reduce the GST rate applied to members’ maintenance charges. This means that while the society can claim credits on some expenses, residents will still have to pay GST on their monthly maintenance charges.
Conclusion: GST on Flat Maintenance Charges
To sum up, GST on maintenance charges of flats is a tax that may apply depending on the total annual turnover of the housing society and the monthly maintenance charges per flat. If the turnover exceeds Rs. 20 lakh or the monthly charge exceeds Rs. 7,500, GST will be levied at a rate of 18%.
However, there are exemptions, especially for smaller societies or those in specific states. It’s essential for apartment owners and tenants to understand how maintenance charges on flats work and when GST is applicable.
Always check your maintenance bill to ensure you're not overcharged. If you’re uncertain, consult with your housing society or builder to get clarity on the GST charges.
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