Deposits which are not refunded but adjusted against the new member of society are Non-refundable deposits, hence, will be taxable under GST.

Last updated: 20 January 2021

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The Gujarat Authority for Advance Ruling has determined that non-refundable deposits collected by a co-operative service society, which are then adjusted against new members, are considered taxable supplies under GST. These deposits are not merely security but are effectively used to provide services, making them liable for GST. The ruling clarifies that when such deposits are retained and applied towards the society's operations or new member onboarding, they constitute a taxable event. This decision impacts how such financial arrangements within societies are treated for GST purposes.

Court :
Gujrat AAR

Brief :
M/s. The Capital Commercial Co-op. (Service) Society Limited, 717/1, Near Krishna Kunj, Sola, Ahmedabad-380060, Gujarat (herein after referred to as the “applicant” or the “Society” for the sake of brevity), is a registered Commercial Co- Operative service society providing services of maintenance of common facilities/amenities to their members. The applicant has collected money from their members under following heads:

Citation :
ADVANCE RULING NO. GUJ/GAAR/R/103/2020

Daily Limit Reached