Now a days, there is this one question that every other Indian citizen is eager to ask. And the question is – Do we need to pay GST on maintenance charges of Residential Buildings? The answer is Yes as well as No.
- If the monthly maintenance charges of your flat are more than 7,500, then you have to pay the GST on the entire amount.
- If the monthly maintenance charges of your flat is less than 7,500, then you do not have to pay the GST on maintenance charges.
The rule has changed since January 2018. Prior to January 2018, the GST on maintenance charges of Residential Buildings was 5,000 per month. Since then, the limit has been increased to 7,500 per month.
There’re certain scenarios in which you don’t have to pay GST even if your monthly maintenance charge exceeds 7,500.
Having said that, now you know about the exact limit of GST on maintenance charges of Residential Buildings. But the thing is – what if you are paying maintenance charges of 7,500 per month?
GST On Maintenance Charges Exceeding 7,500 Per Month
If your monthly maintenance charge is more than 7,500, then you need to pay GST of 18%. Moreover, the GST of 18% is chargeable on the entire amount of the maintenance charges.
Let me take an example to help you understand better.
Suppose there’s this man Suresh who lives in a flat in Mumbai and pays monthly maintenance charges of 10,000. In such a case, the GST would be charged on the entire amount of 10,000. In other words, Suresh needs to pay 18% GST of 10,000 which would equal to 1800 per month.
Here, GST will not be charged on the difference of the amount paid and the GST exempt limit. I.e., it will not be paid on the difference of 10,000 and 7,500. The GST would be payable on the entire amount of 10,000.
Have More Than 1 Flat In Same Residential Complex Or In A Different one
What if I own more than 3 flats in the same building? What if the society is charging 4,000 as maintenance charges for each flat? The total maintenance charges would be around 12,000 for all 3 flats. Do I need to pay GST on 12,000 or would the maintenance charges be exempt from GST?
The limit for maintenance charges is on the basis of per flat or apartment and not per person. A person could be the owner of 2-3 flats or even more than. However, if the maintenance charges for each flat are less than 7,500 per month. In such a case, the person doesn’t need to pay GST on the maintenance charges.
The cumulative amount for the person could be somewhere around 12,000-15,000. But since the maintenance charge per flat is less than 7500, no GST is payable in that case.
It does not matter whether you own a flat or apartment in the same residential building or in different complexes.
RWA Turnover Of More Than 20 Lakhs
Do I need to pay GST if the Residential Welfare Association`s (RWA) annual turnover exceeds 20 Lakhs? Also, if the maintenance charges are less than 7500 per month?
The answer to this question is a big NO. You don’t need to pay GST if the Residential Welfare Association`s (RWA) annual turnover exceeds 20 Lakhs. You don’t have to pay also if your maintenance charges are less than 7500 per month.
This is how some of the builders have been befooling customers in regions where RWA has not been formed. They charge GST on maintenance charges that are less than 7500. They do this by showing that the total turnover on maintenance charges is more than 20 Lakhs.
Under any circumstances, you mustn’t pay GST in residential buildings if the amount is below 7,500.
What if the annual turnover of RWA is less than 20 lakhs and maintenance charges are more than 7500?
Let me take an example to facilitate a better understanding of the same.
There are a total of 15 flats in a society and RWA is formed. As per the society rules, each flat has to shell out 8,000 per month as maintenance charges. This anyway exceeds the exempted limit of 7500, but even in this case, you don’t have to pay the GST.
Here’s the reason why – There’re 15 flats and hence, each flat owner has to pay 8000 per month as maintenance charges. So, the monthly turnover of the RWA is 15*8000 = Rs. 1.2 Lakhs
The annual turnover would be around 14.5 Lakhs. Which is anyway less than the prescribed limit of CBIC i.e. 20 Lakhs. In this scenario, you don’t have to pay GST on maintenance charges as the RWA turnover is below 20 Lakhs.
So the rules are very simple, just go the picture that’s attached in the article. You would be clear about GST on the maintenance charges of residential buildings.
GST on Maintenance Charges – Society Notification
If you want to read more about the CBIC government notification, click on the below-mentioned link to download the PDF.
Lastly, if you need further clarification on the topic, please feel free to write to us in the comment section.