AAR Clarifies GST Treatment on Corpus Fund Collected by Apartment Owners’ Association

M/s Apartment Owners Association of Raj Lake View, a resident welfare association registered under the Karnataka Societies Registration Act, sought an advance ruling on GST implications of corpus funds collected from its members. The association collects monthly maintenance charges for upkeep of common facilities and proposes to collect additional corpus contributions to build a reserve for future capital expenditure, such as structural repairs, repainting, and replacement of capital assets.

The applicant sought clarification on the following issue.

Issue Before AAR: Whether corpus funds collected by an apartment owners’ association from its members for future capital expenditure constitute a “supply” under GST law and whether such collections are eligible for exemption under Entry No. 77 of Notification No. 12/2017-Central Tax (Rate).

AAR Ruled: The Authority for Advance Ruling observed that under Section 7 of the Central Goods and Services Tax Act, 2017, activities between an association and its members are treated as a supply. Therefore, when an apartment association collects money from members for maintenance, management, or future common works, it amounts to supply of services. The Authority held that corpus fund contributions meant for future repairs or common facilities cannot be treated as mere deposits outside GST.

However, referring to Entry 77 of Notification No. 12/2017-Central Tax (Rate), the Authority clarified that contributions collected by such associations may be exempt from GST if the total monthly amount charged per member does not exceed Rs. 7,500. Thus, GST liability depends on whether the monthly contribution crosses this threshold.

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