Will GST spell more cuts for housing societies?
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Will GST spell more cuts for housing societies?

Will group housing societies, which fall under the non-profit category, be asked to pay an 18 per cent tax against maintenance charges received from individual households?

Will GST spell more cuts for housing societies?

Confusion reigns among managements of housing societies in the NCR, with the GST taking effect in the country from July 1.

Group housing societies, which fall under the non-profit category, have been brought under the purview of the GST.

Many are of the view that that day is not far when housing societies will be asked to pay 18 per cent tax against the maintenance charges they receive from individual households.

Absence of clarity is stoking further speculations.

Sanjeev Jaiswal, a senior CA and president of Nirman Apartments in Mayur Vihar Phase I Extension, said, “A large section of society is unaware of this new mode of tax. It would have better been if the government had cleared all doubts before implementing it.”


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According to a few reports in the media, societies where monthly maintenance charges are Rs 5,000 per flat or above will be liable to shell out 18 per cent of their total amount as tax.

However, if a housing society’s monthly maintenance charges are less than Rs 5,000 per flat, but the annual collection is more than Rs 20 lakh, then too, it will have to pay.

If true, almost 80 per cent of housing societies in Delhi will fall under the ambit of this new policy.

Jaiswal adds “Nirman Apartments has 240 flats. Each owner pays Rs 1,000 as monthly maintenance charges. Our total annual collection under the maintenance head is Rs 28,80,000 annually. So our society comes in the 18 per cent tax bracket.”

Many societies feel that if group housing societies fall under the non-profit category, they should be exempt from the tax.

BK Singh, president of East End Apartments in East Delhi’s Mayur Vihar Phase I Extension, said, “Flat owners pay maintenance charges for daily services. And the ones who are paid for these services are the gardeners, security guards, sweepers and garbage collectors. They are not from the government agencies, hence there’s no point levying tax on maintenance charges collected from individual flat owners.”

Another tax expert, Amit Niyogi, who lives in Kallol Apartments in IP Extension, said, “It’s correct that group housing societies have been included under the GST, but the ‘criteria’ and the section under which the tax will be levied is still not clear. Different tax experts have their own views. The way GST has been implemented, without disseminating enough information to people, it’s not going to be easy for either the government or the citizens.”     

At present, cooperative group housing societies are charged 15.55 per cent tax, which includes 15 per cent service tax, 0.5 per cent Swachh Bharat tax and 0.05 per cent non-agriculture tax.

“The government had hiked the tax by 2 per cent just a couple of years back. And now, if another 2.5 per cent is increased under the GST, it will not be acceptable to us,” explained Purusottam Bhatt, president of United India Apartments in Mayur Vihar Phase I Extension.   

As in East Delhi, societies in Noida and Ghaziabad, too, are in a quandary.

Uday Kumar Jain, secretary of Prateek Laurel, a residential complex in Sector 120, Noida, said, “If the tax is applicable on annual maintenance collection, it’s going to become a costlier affair for all residents. But if 18 per cent tax is collected only from individuals who pay Rs 5,000 or more as monthly maintenance, everybody will not be burdened.”

Surya Prakash, general secretary of Grand Omaxe, in Sector 93B, Noida, added, “We have consulted our CA, who is yet to give us a clarification on whether residential societies come under the GST ambit.”


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AOAs and RWAs of Ghaziabad high-rises have echoed similar sentiments.

Speaking to City Spidey, Alok Kumar, president of Federation of AOAs (FedAOA) said that the GST had thrown maintenance bodies into utter confusion. “The entire process is already confusing. And now the calculation and billing of maintenance charges have to be revised,” he said.

Kumar continued, “Earlier individual residents did not have to pay a service tax unless their monthly maintenance exceeded Rs 5,000. But now it’s going to be different. Since the tax will be levied on the total expenditure of the society, the increment will indirectly impact all individual residents. In such a situation, the AOA will have to hike charges.”

Most AOAs City Spidey spoke to maintained that the exemption slab of Rs 20 lakh was useless, as most high-rises have a yearly expense of over Rs 70 lakh.

Sanjay Kumar Jha, president of Gaur Global Village in Crossings Republik, Ghaziabad, maintained that the only way for an AOA to deal with this sudden expense was to hike maintenance charges.

But, he cautioned, “Maintenance charges in group housing societies cannot be hiked overnight, as such a step may evoke resistance from residents. For now, we are planning to fulfil the requirements from the society’s savings funds. We will later make a proposal for a hike in a general meeting of residents.”