With Goods and Services Tax or GST rolled on, there are a number of factors homeowners need to be aware of. As a homeowner, you are bound to wonder what will be the impact of GST will be on the monthly maintenance charges paid by them. To help you in the same, mentioned are some aspects that tell when and what components GST will be applicable.
When Is Goods and Services Tax Applicable On The Maintenance Charges?
As a homeowner, you definitely know that earlier, maintenance charges were subject to the levy of the service tax if the total of maintenance charges charged by the housing society exceeds Rs. 10 lacs in a financial year. However, under GST, the same has been increased to Rs. 20 lacs. For the same, the housing society is required to collect the GST from the homeowners. The housing society will have to get a registration under the GST for the same. However, as a member of the society, you should know, GST cannot be levied if the maintenance charges do not exceed Rs. 5000 per month, even if the registration is obtained.
There is no need to be registered under the GST if the aggregate of the charges levied does not exceed Rs. 20 lacs. Therefore, GST need not be levied on the maintenance charges. For flats of different sizes in the society, there is every possibility for a smaller flat to get a monthly bill less than Rs. 5000 and hence it is the levy of GST. However, the other homeowners of larger flats will still have to pay the GST.
GST Is Levied on What Components?
You should know, the housing society cannot collect GST on all the components. It will not recover GST for the homeowners in case of reimbursement of the expenses that are incurred by the society and is recovered from the members. This further includes different taxes that are paid by the housing society on behalf of the members. This majorly includes property tax, municipal tax, non-agricultural land tax, water bill and more. A number of housing projects like Neelkanth Woods do keep these aspects in mind to ensure the home owners do not face any problem.
Rate of GST
The housing society will levy GST at 18% on the maintenance charges that are recovered from the members. However, the society can benefit from the input credit for the GST paid on different supplies like payment of audit fees, security services and more. Though the society can benefit from the input credit for these items, it cannot reduce the GST rate. In case, the society is registered under GST; it is important to pay the GST under the reverse charge mechanism.
Do know these aspects before you pay the maintenance charges.