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Learn about GST charges on maintenance by flat own

There has been a considerable amount of disruption in the Real Estate sector all over India..

There has been a considerable amount of disruption in the Real Estate sector all over India. With the introduction of GST, there is confusion prevailing about maintenance by flat owners. As people continue to take interest in buying new property that they can use, they need to follow the new rules formulated by the government. Trying to understand GST charges and its applications in real estate investment in India is complicated.

This blog simplifies the GST charges meant for flat owners in Mumbai. Should you feel like acquiring more information, speak to the developer who has offered flats for sale in Mumbai about the same.

An overview

Flat owners in Mumbai will have to pay 18% GST. The condition is applicable for those residents whose monthly contribution to RWA (resident welfare association) goes above the sum of Rs. 7500.00.

  • The charges are applicable on a monthly basis per member. The entire amount will be taxable if it exceeds Rs. 7,500/-. For example, if the monthly contribution is Rs. 9000/- the charges applicable will be 18% GST i.e. on Rs. 9000 and not 9000 – 7500.
  • In case a member owns more than one flat in the complex then the charges continue to be per person per flat. For example, a owner is paying monthly charges of Rs. 15,000 towards maintenance of 2 flats, the exemption of GST will be available for each flat.
  • The RWAs are allowed to take Input Tax Credit that pertains to lawns, generators, water pumps, fittings and repairs as part of maintenance services.

On which home components GST is levied?

GST continues to impact homebuyers. People are looking up to real estate companies in Mumbai to provide information on various components that can attract this charge for flat owners. A society is established after the developer completes the project and delivers it over to the flat owners. The society will not levy any price on reimbursements or repairs carried out which are recovered by the members. It will not be applicable for the sinking fund. However, it may be required for utility payments done on behalf of the members. These include taxes related to property, water, electricity, municipality, non-agriculture and common areas used by all. A housing society will have to levy GST on the contributions made by the members towards repairs fund. The amount also cannot be reduced and remains the same. Following compliances is a must for all residential complexes.

In brief:

  • If a society charges Rs.5000/- for maintenance from a member then there is no GST applicable.
  • If a builder is maintaining the property and paying taxes, then GST is applicable to the service as in large societies the amount often crosses Rs. 20 lakhs.
  • This amount is now applicable all over India and not just Mumbai.

All these prices are active from April 1st 2019. If you ought to know more about the maintenance charges for flat owners, it is best to get in touch with your builder or a property consultant. They can clarify any other major questions that seem troublesome.

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