GST On Apartment Maintenance Not New, Rule Exists Since 2019: Tax Officials

New Delhi: Amid rising concerns and confusion among apartment residents, tax officials have clarified that the Goods and Services Tax (GST) on apartment maintenance charges is not a new rule.

It is an existing regulation that has been in place since 2019, they maintained.

The clarification comes as housing societies across the country witness growing panic and debate, especially on social media and in community meetings.

As per a NDTV Profit report, the Central Board of Indirect Taxes and Customs (CBIC) had, in 2019, directed that flat owners must pay 18 per cent GST on maintenance charges if the amount paid to their Resident Welfare Association (RWA) exceeds Rs 7,500 per month.

This has been a long-standing rule, but it has recently come back into the spotlight due to stricter compliance efforts by tax officials.

However, a 2021 ruling by the Madras High Court brought some relief. The court ruled that GST should be charged only on the portion of the maintenance amount that exceeds Rs 7,500 -- not on the full amount.

This ruling effectively overruled a 2019 circular issued by the CBIC and a decision by the Authority for Advance Rulings (AAR), which had stated that if the monthly charges exceeded Rs 7,500, then GST would apply on the entire amount, and not just the excess.

Importantly, the tax department has not appealed the Madras High Court judgment in any higher court so far.

This means the ruling stands, but it may not be followed uniformly across all states. Some tax authorities may still choose to go by the original CBIC interpretation, the report said.

Currently, RWAs are required to collect 18 per cent GST on monthly maintenance charges only if two specific conditions are met: the per-apartment monthly maintenance exceeds Rs 7,500, and the society’s annual turnover is more than Rs 20 lakh.

If both these conditions apply, then the housing society must register under GST and charge tax on the entire maintenance amount, it added.

The report also said that many apartment complexes in big cities are still not following this rule. As a result, the tax department is now urging RWAs to comply and ensure proper tax payments.

(Except for the headline, this article has not been edited by FPJ's editorial team and is auto-generated from an agency feed.)