GST on Corpus Fund Payable at Receipt; Water Supply Part of Composite Maintenance Service

Godrej United Owner’s Association manages common facilities and amenities for a residential complex in Bengaluru. The association collects maintenance charges from apartment owners based on the size of their units and usually issues invoices on a quarterly basis. It currently claims GST exemption under Entry 77 of Notification No. 12/2017-Central Tax (Rate), which allows exemption up to Rs. 7,500 per month per member for services provided by housing societies for common use.

Apart from maintenance charges, the association also collects corpus or sinking fund contributions for future repairs and infrastructure works. It occasionally receives voluntary donations from residents for cultural events such as Ganesh Chaturthi and Durga Puja. To clarify the GST treatment of these collections, including maintenance limits, water charges, corpus funds, and festival donations the association approached the Karnataka Authority for Advance Ruling under the Central Goods and Services Tax Act, 2017.

Issue Before Court: The authority examined whether the Rs. 7,500 monthly exemption should be calculated per month or annually, whether water charges qualify as an exempt supply, whether corpus fund contributions attract GST, whether such funds should be clubbed with maintenance charges for exemption purposes, and whether voluntary donations collected for festivals are taxable.

Tribunal Ruling: The Karnataka Authority for Advance Ruling clarified that the Rs. 7,500 exemption under Notification No. 12/2017-Central Tax (Rate) applies per member per month, regardless of the billing cycle. It also held that water supplied to resident whether through tankers or the Bangalore Water Supply and Sewerage Board is part of the composite maintenance service and not a separate exempt supply.

The authority further ruled that corpus or sinking fund contributions are advance payments for future services, making GST payable at the time of receipt under the Central Goods and Services Tax Act, 2017. However, such contributions need not be clubbed with maintenance charges for the Rs. 7,500 exemption limit. Voluntary donations collected for cultural or religious events without any service in return were held to be outside the scope of GST.

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