Exemption is not available when the maintenance charges exceed Rs. 7,500/- per month per member

Last updated: 05 October 2024

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The West Bengal Authority for Advance Ruling has clarified that if monthly maintenance charges collected by an apartment owners' association exceed £7,500 per member, the entire amount is subject to GST. Contributions to a sinking fund are considered advance payments for future services and are taxable. Similarly, charges for common area electricity are taxable if the overall maintenance services don't qualify for GST exemption.

Court :
Advance Ruling, West Bengal

Brief :
The Authority for Advance Ruling, West Bengal in the case of Prinsep Association of Apartment Owners, In re [Order No. 22/WBAAR/2023-24 dated November 29, 2023] ruled that the exemption is not available when the maintenance charges exceed Rs. 7,500/-per month per member. Where the charges exceed Rs. 7,500/- per month per member, the entire amount is taxable. Further, the amount collected from members for setting up a sinking fund is an advance payment towards future supply of services and the Assessee is, therefore, liable to pay tax on such supply. Lastly, an amount collected on account of common area electricity charges, being a part of composite supply, is taxable in cases where the supply of common area maintenance services as provided by the Assessee fails to qualify for exemption under serial number 77 of the Notification No. 12/2017-Central Tax (Rate) dated June 28, 2017,("Notification No. 12/2017") as amended.

Citation :
Order No. 22/WBAAR/2023-24 dated November 29, 2023

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1 Year PLAN

1999

(Excl. of GST ₹359)

2 Years PLAN

3499

(Excl. of GST ₹629)

BEST VALUE

3 Years PLAN

4999

(Excl. of GST ₹899)

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Attached File : 33169_5755_prinsep_association_of_apartment_owners.pdf

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Judgement posted by

Bimal Jain

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FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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