FAQ on GST on Housing Society- Rules & Exemptions
Goods and Services Tax (GST) has brought clarity and standardization to tax laws, including those impacting housing societies. Residents and administrators often have several questions about how GST applies to housing societies. Here are some common FAQs explained:
Q1. What is GST? Is it Applicable to Housing Societies?
GST is an indirect tax on the supply of goods and services. Housing societies are considered persons under GST law and the service they provide to members, like maintenance and security, is taxable.
Q2. Are Housing Society Activities Considered Business Activities under GST?
The answer to this GST on housing society FAQ has been less ambiguous. As a housing society, a society provides services to its members as stated under the provisions of Section 7(1)(aa) of the CGST Act, 2017, and it is a supply.
Besides, Section 2(17)(e) categorises the supply of benefits or amenities by the clubs, associations, or societies to the members as a business activity. The assumption of housing societies being service providers means that they will be subject to GST, provided that thresholds are met.
Q 3. What is the Key GST Exemption for Housing Societies?
Entry 77 of the GST Exemption Notification provides major relief. Contributions collected by a housing society from members are exempt up to ₹7,500 per month per member.
- In case of the charge of ₹ 7500 or less, the GST does not apply.
- In case the charge is more than ₹7500, GST is imposed on the entire amount.
Example:
- Contribution = ₹7,500 → No GST.
- Contribution = ₹9,000 → GST at 18% on ₹9,000, not just the excess ₹1,500.
Q 4. When Must a Housing Society Register for GST?
According to Section 22 of the CGST Act, 2017, registration is obligatory provided a society with an annual aggregate turnover greater than 20 lakh (10 lakh in special category states).
Section 23, however, is an exemption of societies that only deal with exempt services. Therefore:
- Regarding monthly contributions less than ₹7500 per member, registration is not required, but the turnover exceeds 20lakh.
- Registration and GST compliance are obligatory when the contribution is more than ₹7500 and the turnover is more than 20 lakh.
Q 5. What Happens if Maintenance Charges Exceed ₹7,500?
As mentioned in FAQ 3, assuming the monthly contribution towards the maintenance per member is over ₹7,500, it will be obligatory for the society to pay the GST on the entire contribution.
Example:
- Contribution: ₹9,500
- GST @ 18% = ₹1,710
- Total payable = ₹11,210
This rule applies uniformly across all registered societies.
Q 6. Can Housing Societies Claim Input Tax Credit (ITC)?
Yes. In situations where goods and services purchased are used by the housing society, ITC on GST can be registered on the housing society.
Eligible ITC includes:
- Capital goods: lifts, generators, water pumps.
- Goods: cleaning materials, pipes, fittings.
- Services: contractor services, repair, and maintenance.
This reduces the effective tax burden on societies and members.
Q 7. Are Statutory Charges like Property Tax and Water Tax Subject to GST?
No. Charges collected by societies on behalf of statutory authorities are outside the GST’s scope.
Exempt charges include:
- Property tax.
- Water tax.
- Electricity charges are billed directly by utility providers.
Taxable charges include:
- Repairs and maintenance funds.
- Parking charges.
- Non-occupancy charges.
- Interest on delayed payments.
This distinction ensures that only society-provided services are taxed.
Q 8. How Does GST Apply to Members Owning Multiple Flats?
The exemption of ₹7500 per flat and not per member.
For example:
- A member owns 2 flats.
- Each flat pays ₹7,000.
- Both flats enjoy exemption separately.
If one flat’s charges exceed ₹7,500, GST applies only on that unit.
Q9. What Services Provided by Housing Societies are GST-Exempt?
Some services RWAs provide are exempt from GST, reducing members’ costs.
Examples of exempt services:
- Water charges for individual consumption.
- Electricity is supplied directly by boards.
- Property tax and non-agricultural tax are collected on behalf of the government.
These exemptions apply as long as the society merely acts as a collecting agent.
Q 10. What is the GST Rate for Housing Society Services?
The applicable GST rate on taxable services provided by RWAs is 18%.
Taxable services include:
- Maintenance charges (beyond ₹7,500).
- Repair funds and sinking funds.
- Parking fees.
- Penalties and interest for late payments.
Q 11. How is GST Calculated in Practice?
The calculation of GST is done according to the contribution per member.
| Monthly Contribution | GST Applicable? | Example GST (18%) |
| Up to ₹7,500 | Exempt | Nil |
| ₹9,000 | Yes | ₹1,620 |
| ₹10,000 | Yes | ₹1,800 |
Q 12. Does GST Make Housing Society Services Costlier?
Not necessarily. Though the GST would be applied where charges exceed ₹7,500, the societies would be given ITC to offset the price.
Advantages under GST:
- ITC of capital goods and services lowers the net costs.
- Fourth, it should be modernised taxation relative to the previous service tax regime under GST.
- More social financial transparency.
Therefore, GST can offset and not significantly raise costs.
Q13. Is GST Applicable on Sinking Fund Contributions Collected by Housing Societies?
Yes. Contributions made to a sinking fund by the housing societies are liable to GST in case the society is registered, monthly contribution per member is more than 7,500.
The sinking fund covers costly, long-term repair or replacement expenses like building repairs, waterproofing, or lift replacement. Even though the members pay this fund for future use, it is regarded as a supply of services under the GST provisions.
- If the monthly contribution, including the sinking fund, exceeds ₹7,500, the entire contribution becomes taxable at 18%.
- No GST applies if the total contribution is within the exemption limit, even if part is earmarked for the sinking fund.
Hence, societies must pay special attention to considering the sinking fund collections in GST liability.
Q 14. How Should Housing Societies Treat Interest or Penalty on Late Maintenance Payment under GST?
Interest or penalty charged by a housing society for delayed maintenance payments is taxable under GST.
According to Section 15(2) (d) of the CGST Act, all the interest or late fee imposed in relation to a supply form part of the value of such a supply. In the case of housing societies, the supply is maintenance contributions, and the cost of punishment for default of payment is an incidental cost associated with the supply.
Example:
- Monthly maintenance = ₹8,000 (taxable).
- Late fee charged = ₹500.
- GST at 18% is levied on ₹8,500.
Thus, even penalties and interest payments fall within GST’s scope, increasing society’s compliance requirements.
Q 15. Are Contributions Collected for Cultural or Social Events Subject to GST?
If the total monthly contributions from members, including those towards cultural or social events, exceed the exemption limit of ₹7,500, GST must be applied.
Housing societies usually raise special funds to attend festivals, communions, or cultural events. Although it is a social purpose fund, it remains an aspect of the members’ contribution to society.
- Below ₹7,500 total monthly contribution: Exempt from GST.
- Above ₹7,500 total monthly contribution: Entire amount, including cultural fund, is taxable at 18%.
This is why determining liability in case of such collections should be considered as taxable turnover by RWAs.
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