Trans­fer fees may bring co-op socs un­der GST

Wa­ter, Power Charges Not In Tax Am­bit

The Times of India (Mumbai edition) - - TIMES CITY - Chit­taran­jan.Tem­b­hekar @times­

Mum­bai: A to­tal of 50,000 co­op­er­a­tive hous­ing so­ci­eties (CHS) in Mum­bai Metropoli­tan Re­gion (MMR) will have to reg­is­ter un­der the Goods and Ser­vices Tax (GST) regime as their an­nual col­lec­tions (turnover) are likely to ex­ceed the thresh­old of Rs20 lakh. Around 70,000 such so­ci­eties in the state are to come un­der the GST am­bit.

Thus, col­lec­tions from trans­fer fees may mean that even CHSs hous­ing the mid­dle classes may find them­selves hav­ing a turnover of over the thresh­old of Rs 20 lakh and would need to reg­is­ter un­der GST.

“In such in­stances, any trans­fer fee paid to the so­ci­ety by the new owner on ex­change of own­er­ship of flat will be tax­able un­der GST at 18%,” said Ramesh Prabhu, chair­man of Ma­ha­rash­tra So­ci­eties Wel­fare As­so­ci­a­tion which has a mem­ber­ship of over 50,000 so­ci­eties.

For in­stance, the Sid­dhiv­inayak hous­ing so­ci­ety in Chem­bur has found it­self in a sit­u­a­tion where it has had to reg­is­ter un­der GST, said Roshan Matkari, a so­ci­ety mem­ber.

Once a so­ci­ety is reg­is­tered un­der GST, it has to meet var­i­ous fil­ing obli­ga­tions. It also has to com­ply with the pro­vi­sions of the re­verse charge mech­a­nism. Un­der this mech­a­nism, if it makes pay­ments to un­reg­is­tered ser­vice providers such as clean­ers, elec­tri­cians and plum­bers, it will have to bear the GST of 18% on such pay­ments and also have to file rel­e­vant forms on the GSTN por­tal.

But what is im­por­tant for flat own­ers is that the crite- ria for reg­is­tra­tion and for im­po­si­tion of GST on main­te­nance charges col­lected from mem­bers are dif­fer­ent. The govern­ment has time and again clar­i­fied that GST will be levied on main­te­nance charges col­lected from flat own­ers (mem­bers of the CHS) only if the an­nual col­lec­tion of the so­ci­ety is Rs20 lakh or more and the monthly main­te­nance charge is more than Rs5,000 per mem­ber (See graphic).

Main­te­nance charges are typ­i­cally col­lected by a CHS for var­i­ous pur­poses like pro­vid­ing se­cu­rity, lift main­te­nance, main­te­nance of com­mon ar­eas like a lobby or a gar­den and are typ­i­cally a re­im­burse­ment for ex­penses in­curred. As ex­plained by TOI ear­lier, taxes like prop­erty, wa­ter, or elec­tric­ity charges col­lected by the CHS from its mem­bers on be­half of lo­cal au­thor­i­ties or power en­ti­ties will not be sub­ject to GST.

Ac­cord­ing to a govern­ment cir­cu­lar, co-op­er­a­tive hous­ing so­ci­eties un­der GST are en­ti­tled to in­put tax credit (ITC) in re­spect of taxes paid by them on cap­i­tal goods (such as gen­er­a­tors, wa­ter pumps, lawn fur­ni­ture), goods (such as taps, pipes, other san­i­tary/hard­ware fill­ings) and against in­put ser­vices such as re­pair and main­te­nance ser­vices.

De­spite avail­abil­ity of in­put tax credit, sev­eral mem­bers find an in­crease in their bills, ow­ing to the rate in­crease from 15% to 18%. Vidyesh Kar­markar from Jee­van­dayini co­op­er­a­tive hous­ing so­ci­ety in Malad said his so­ci­ety had al­ready started charg­ing 3% more tax­a­tion than be­fore, thus tak­ing the over­all tax­a­tion on Rs5,300 monthly main­te­nance to Rs954. “Ear­lier we paid Rs795 on the same amount. Thus the new tax­a­tion is a net in­crease of Rs159 on the bill,” he pointed out.

Flat own­ers who have been asked to pay GST by their CHS should check that the so­ci­ety has ob­tained valid reg­is­tra­tion. “How can I pay GST on the bill which does not bear an au­then­tic GST reg­is­tra­tion num­ber?” asked Ash­le­sha Mu­jum­dar, who re­sides in a flat in a CHS.

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