GST..the buzz word these days..All are talking about the GST applicability for traders and businessmen and CHS as usual are waiting for the clarity on the applicability , the impact and the solutions on how to go ahead.
So..lets find out whether GST is applicable for CHS or not?
GST is a levy and what is taxed is " Supply" which includes supply of goods or services or both for a consideration by a "Person" in the course of furtherance of "Business" .
Now, let's analyse whether CHS is a "Person" doing " Business" for consideration?
The answer is available in the definition of the "Person" where even Cooperative Society is covered as a person liable for GST. Then the question comes , is society doing a Business ?? Because what is covered is GST on a Person carrying on Business and the definition of " Business " covers to say- provision by a club, association , society or any such body providing facilities or benefits to its members for a subscription or any other consideration. So the activities of CHS are very much covered under the definition of "Business" . Thus , GST is very much applicable to CHS .
Now, on what amount the GST is applicable and whether threshold limit is applicable to CHS? The threshold limit of RS.20lacs is very much available to the CHS being a Person and what is going to be considered is "Aggregate Turnover" which is nothing but the taxable and Exempt supplies or Taxable and Exempt services that CHS Provide.
Now, what are Exempt supplies or services and what are Taxable Supplies or Services?
The Exempt supplies are those services which are either attracts nil rate of a tax or are covered by Exemption Notification. Now, As per Exemption Notification, the maintenance charges upto RS.5000 per member per month are exempt . The maintenance charges which are collected from the members as reimbursement of expenses ie for procuring services from third person for Common Use is what is Exempt and not the entire Maintenance Bill amount. That means each and every society will have to see the itemised bill and decide which item is reimbursement of charges for common use .So, if any item of bill is not for common use but member specific item then it will be a Taxable supply.So ideally, the maintenance charges collected per unit basis for common maintenance will only be subject to 5000/- exemption limit and Parking and NoC will not be covered since it's member specific service in my opinion.
Now, there are certain other receipts like Bank FD Interest , Mobile Tower Rentals , Hoarding Income, Transfer Premium for transfer of Flat etc. Bank FD interest is specifically exempt under GST but other receipts Since not in the nature of Reimbursement of expenses but in the nature of member specific receipt or is a Taxable receipt and hence would be subject to GST.
So, if the Exempt supplies, Taxable supplies including other receipts are within threshold limit of RS.20 lacs then only GST registration is not needed otherwise just because of parking or NOC or Mobile Rentals or Transfer Premium, the CHS may be liable for Registration for GST.
Feel free to reach me on ssca28@rediffmail.com OR call me on 9820053395/53495
CA Shilpa Shinagare
So..lets find out whether GST is applicable for CHS or not?
GST is a levy and what is taxed is " Supply" which includes supply of goods or services or both for a consideration by a "Person" in the course of furtherance of "Business" .
Now, let's analyse whether CHS is a "Person" doing " Business" for consideration?
The answer is available in the definition of the "Person" where even Cooperative Society is covered as a person liable for GST. Then the question comes , is society doing a Business ?? Because what is covered is GST on a Person carrying on Business and the definition of " Business " covers to say- provision by a club, association , society or any such body providing facilities or benefits to its members for a subscription or any other consideration. So the activities of CHS are very much covered under the definition of "Business" . Thus , GST is very much applicable to CHS .
Now, on what amount the GST is applicable and whether threshold limit is applicable to CHS? The threshold limit of RS.20lacs is very much available to the CHS being a Person and what is going to be considered is "Aggregate Turnover" which is nothing but the taxable and Exempt supplies or Taxable and Exempt services that CHS Provide.
Now, what are Exempt supplies or services and what are Taxable Supplies or Services?
The Exempt supplies are those services which are either attracts nil rate of a tax or are covered by Exemption Notification. Now, As per Exemption Notification, the maintenance charges upto RS.5000 per member per month are exempt . The maintenance charges which are collected from the members as reimbursement of expenses ie for procuring services from third person for Common Use is what is Exempt and not the entire Maintenance Bill amount. That means each and every society will have to see the itemised bill and decide which item is reimbursement of charges for common use .So, if any item of bill is not for common use but member specific item then it will be a Taxable supply.So ideally, the maintenance charges collected per unit basis for common maintenance will only be subject to 5000/- exemption limit and Parking and NoC will not be covered since it's member specific service in my opinion.
Now, there are certain other receipts like Bank FD Interest , Mobile Tower Rentals , Hoarding Income, Transfer Premium for transfer of Flat etc. Bank FD interest is specifically exempt under GST but other receipts Since not in the nature of Reimbursement of expenses but in the nature of member specific receipt or is a Taxable receipt and hence would be subject to GST.
So, if the Exempt supplies, Taxable supplies including other receipts are within threshold limit of RS.20 lacs then only GST registration is not needed otherwise just because of parking or NOC or Mobile Rentals or Transfer Premium, the CHS may be liable for Registration for GST.
Feel free to reach me on ssca28@rediffmail.com OR call me on 9820053395/53495
CA Shilpa Shinagare
what about the municipal taxes - will they be also considered as exempt or taxable supply or can it be treated separately as society is merely collecting and paying the same to govt. authorities ?
ReplyDeleteAppreciate your Contribution to the Profession. Nice article.
DeleteVery informative
DeleteVery informative article and nicely drafted. Keep it up mam, and thanks for sharing knowledge.
ReplyDeleteKindly provide your view on GST applicability on the following charges builder collect after receiving Occupancy Certificate:
ReplyDelete1. Legal Charges for formation & Registration of Society
2. Legal charges & Expenses of Developers & Incidental to this agreement
3. Amounts incurred by developers towards the fitness center
4. Expenses towards electricity meter charges and water meter charges and other incidental expenses incurred by developers
5. 12 months maintenance charges
6. Municipal taxes
Thanks
Lets read Section 7(1)a of the central GST act, its is clear that scope of supply (goods or services) is only taxable when its for a consideration.
ReplyDeleteNow we need to answer these questions.
1. what is the service charge by society to give this service? usually no charges as Managing Committee's service of collecting funds and reimbursing is gratis and for no consideration.
2. What is reimbursed as salary, or to purchase goods or services at cost basis is definitely not service charges of the society.
3. Now certain charges charged by society say for booking hall etc, these are taxable services.
Intention of above is that billing should be such that mere transfer of funds from member account to a society account to a third party account without any value addition or without any consideration cannot be taxed, thus most of the member contribution is not source of supply.
Very few services are provided per se by the society for consideration and taxable value will be very less, as even by definition of aggregate turnover (section 2(6), its only of taxable supplies, so complete maintenance bill is not taxable supplies. thus Rs 5000 per flat or 20 Lakh aggregate may not be surpassed for most buildings or complex.
Very true ..now the limit is further enhanced to 7500/- per member per month and since aggregate turnover is taxable and Exemption is only for the services which are outsourced from 3rd party for common purpose, in my opinion parking , non occupancy charges which are member specific are very much under GST ambit and hence each society ideally would be covered.
DeleteAgainst, the service is defined as anything other than goods so the housing society is very much dealing in services and concept of mutuality do not have any role to play in GST era..my view
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ReplyDeleteDear Madam,
ReplyDeleteIs it mandatory to invest sinking and RM fund amount is state or district cooperative banks.
Or can we invest in any coopeacoope bank?
Regards
You can invest in nationalised bank
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