GST Applicable on Sinking Fund Collected From Residents for Purpose of Maintenance of Common Area of Apartment: AAR:

GST Applicable on Sinking Fund Collected From Residents for Purpose of Maintenance of Common Area of Apartment: AAR The applicant, Crimson Dawn Apartment Owners Welfare Association, is a Residents Welfare Association (RWA) and is engaged in offering maintenance and repairs of common areas of apartments, including corridors, garden, play area, pathway, clubhouse, swimming pool, gymnasium, electric equipment, etc. It has a total of 120 members, and maintenance charges based on the area occupied by members are collected quarterly, at a rate not more than Rs 7,500 per month per apartment. Additionally, the applicant also collects a separate Corpus or Sinking Fund for unforeseen capital expenses in future. This fund is managed differently from regular maintenance collections.

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Question Asked by Applicant

The applicant is seeking an advance ruling for the following question: Query-1: Whether the corpus /Sinking Fund collected from members liable to GST? If charged to GST, what is the rate of GST to be charged on the collection of Sinking fund? What is the SAC Code? Query-2:If the corpus/Sinking fund collected from members liable to GST, whether the GST paid on such services (input service) be set off against the GST payable on the amounts collected as corpus/sinking funds. Query-3: Once GST registration is taken, whether required to levy or collect GST on maintenance charges, provided that the monthly sum does not exceed Rs.7,500/-?

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Tamil Nadu AAR Decision

The Advance Authority for Advance Ruling, Tamil Nadu stated that:

• CGST and SGST apply on the corpus or sinking or capital fund collected from the members for the purpose of painting and carrying out building maintenance work in the common area of the apartment.
• The applicant can utilise ITC against their outward liability since the applicant is liable to pay GST. However, the applicant can utilise ITC under some conditions specified in the provisions of Section 17(2) of the Act and Rule 42 of the Rules.
• If the contribution per month per member is less than Rs. 7,500, then no GST is applicable on that amount.