Pay GST on the entire amount if society's monthly upkeep exceeds Rs 7,500

Pay GST on the entire amount if society's monthly upkeep exceeds Rs 7,500 The GST Authority for Advance Ruling (GST-AAR), Maharashtra bench, has addressed a slew of concerns commonly encountered by co-operative housing societies in a thorough ruling. In response to queries raised by the Bhandup-based Mahindra Splendour Co-operative Housing Society (CHS), the GST-AAR bench stated that if monthly charges collected from members (flat owners) exceed Rs. 7,500 per month, goods and services tax (GST) will be levied and collected on the entire sum, not on the differential value that exceeds this threshold. For example, if maintenance charges are Rs 9,000 per month, GST will be levied on this amount rather than the Rs 1,500 difference. The AAR bench noted that the GST administration had appealed a Madras High Court ruling that affirmed the imposition of GST on the difference sum. A higher court has issued a stay order, and the case is not yet resolved. The AAR further stated that charges collected by the CHS for property tax, power charges, and other statutory fees that are part of monthly maintenance bills would be disregarded while computing the Rs 7,500 monthly threshold limit. The AAR's decisions have persuasive value and are taken into account by authorities during assessments. It should be emphasised, however, that smaller CHSs with an annual sales of Rs 20 lakh or less are exempt from registration and, as a result, are exempt from GST responsibilities. The primary goal of collecting funds for the sinking fund, building repair fund, education money, and election fund, according to Mahindra Splendour CHS, is to meet future or unplanned big expenditures. Such donations take the form of a "deposit" and are used for the precise purpose specified in the bylaws. As a result, GST should not be applied at the time of collection. The AAR bench stated that payments for sinking and repair funds are collected in accordance with the percentage set in the CHS's by-laws and circulars issued by the Registrar of Co-operatives. A sum can be reimbursed if it is a deposit. Such funds, however, are not refundable to members. As a result, GST would be activated at the time of collection rather than later when it is used (say, for painting the building). Similarly, it determined that education and election money are not deposits and therefore GST applies at the moment of collection. Through a sophisticated storage and pumping system, this CHS supplemented water received from the Mumbai municipal corporation. It also had a sewage treatment system that provided recycled water to all flats for toilet flushing. The AAR bench ruled that Notification 2/2017, which allows for a zero GST rate, only applies to goods delivered and not services provided. Mahindra Splendour offers a'service of supplying water'; members are not paid dependent on the amount of water supplied. As a result, the notification is ineffective, and water supply charges are subject to GST. In the absence of specifics, the AAR bench did not provide a definitive response. However, it was pointed out that major repairs involving large expenditures, such as the replacement of a motor in a lift, increase the useful life of the equipment. Major repairs are capitalised as assets in accounting, and depreciation (write-off) is accessible over time. It emphasised that input tax credit will not be accessible for capitalised expenses. To Read the Ruling Download PDF Given Below :