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1. Introduction

GST as we all know is the tax payable when goods or services are supplied. It is very important to understand the concept of supply as it is the basic rule to apply whether a particular goods or services would attract GST. Supply is the taxable event under GST. In this article we would discuss whether housing society is covered under GST.

 2. Are housing Society covered under GST?

As per GST law, GST is payable on goods or services supplied. Supply as per GST Law includes all forms of supplies such as sale, transfer, exchange, barter, lease, rental, license or disposal made or agreed to be made for a consideration, by a person, in the course or furtherance of business. Let us now analysis the 3 concepts of supply in detail:

  1. Consideration: Any payment made or to be made whether in money or otherwise for supply of goods or services
  2. Person: Person as per GST law includes individual, HUF, company, firm, LLP, AOP or BOI whether incorporated or not in India or outside India, any corporation established by or under any Central Act, State Act or provincial act or a government company, any body corporate incorporated by or under the laws of a country outside India, a co-operative society registered under any law relating to co-operative societies, a local authority, central or state government, society as defined under the societies registration act 1860, trust and every artificial judicial person
  3. Business: Business includes any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity whether or not it is for pecuniary benefit, supply or acquisition of goods including capital goods and services in connection with commencement or closure of business, provision by a club, association, society or any other such body of the facilities or benefits to its members, admission for a consideration of persons to any premises, services supplied by a person, services provided by a race club, any activity or transaction undertaken by central, state government or any local authority in which they are engaged as public authorities

A co-operative society (being a person as defined above) provides services to its member in the form of facilities or benefits to it member (in course of business) for a consideration. Hence based on above definition and concept of supply co-operative society also gets covered under GST.

3. Registration

A co-operative society like any other businesses is liable to register if the aggregate turnover or collection is more than 20 lakhs in the preceding financial year. If the turnover does not exceed 20 lakhs the society may not get register. Society being a service provider cannot register under composition scheme

4. Rate of Tax

The society is liable to collect tax at the rate of 18% if the aggregate turnover exceeds 20 lakhs

5. What are the charges levied by co-operative society from its member liable to GST?

The society generally collects the following charges from its members:

Charges Collected

Whether GST applicable or not

Maintenance Charges

Co-operative society is liable to levy GST on maintenance charges at the rate of 18%.

Exemption: If the maintenance charges is Rs 5000 or less per month per member than GST shall not be levied by the society if the society is registered under GST

Property tax as per Municipal Corporation of Greater Mumbai, Water tax- Municipal Corporation of greater Mumbai(MCGM)

Services provided by the Central Government, State Government, union territory or local authority to a person other than business entity is exempted from GST. If the society collects such taxes on behalf of MCGM from individual flat owners then GST is not leviable

Non-Agricultural Tax- Maharashtra State Government, Electricity Charges

GST is not leviable on non agricultural land, electricity charges etc which are collected under other statutes from individual flat owners but if these charges are collected by the society for generation of electricity by society’s generator or to provide drinking water facility or any other service then such charges collected by the society are liable to GST

Sinking Fund, Repairs & maintenance Fund, Car parking charges, Non occupancy charges, simple interest for late payment

These charges collected are liable to GST as these are collected by the society to provide services to its members

6. Input Tax Credit

Co-operative housing society is eligible to claim input tax credit on taxes paid by it on purchase of  capital goods or input services such as repair and maintenance. In pre-GST regime society was not liable to claim ITC on taxes paid by them. This would benefit the society in the form of reduction in cost. No ITC would be available where GST is not applicable on expenses like Electricity expenses, Stamp Duty, property taxes etc

7. Reverse Charge Mechanism

Reverse Charge is a mechanism under which the recipient of supply is liable to pay GST. Co-operative societies are also covered under reverse charge mechanism. If the society avails any supply of goods or services from unregistered persons the society is liable to pay GST on such goods or services. Similarly if the society avails services which are compulsorily covered under RCM, the society is liable to pay GST on such services. The society can claim ITC on tax paid under RCM.

8. Compliance to be followed by the society under GST law

  • Returns Society are also liable to file monthly returns i.e. GSTR-1, GSTR-2, GSTR-3
  • Invoices: Society is required to change the invoice format of monthly/quarterly/yearly bills invoiced to the members. Society should mention the GSTIN No, the tax collected and so on in the invoice issued by it
  • Books of Accounts: Society is liable to prepare and maintain proper books of accounts. It would also be liable to audit if the aggregate turnover exceeds the threshold limit of audit  

9. Conclusion

If the aggregate turnover exceeds 20 Lakhs co-operative society are compulsorily required to get registered, there is no other exemption for registration. Also in GST regime hosing society are eligible to claim ITC on inward supply made by it which was not allowed earlier, this would benefit the society in the form of reduction in cost. The society can transfer this benefit to its member is the form of reduction of  maintenance charges collected from its member after due a detailed the cost benefit analysis available to the society under GST


Published by

Bhagyashri Jain
Category GST   Report

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