Statutory Compliances for Housing Societies

Goods & Service Tax for Housing Societies

If the Turnover of a housing society exceeds Rs. 20 lakh per annum, the housing society compulsorily has to get registered under GST as per CGST Act, 2017. However, that does not mean the housing society is liable to pay GST on the charges collected from its members.

The Central Government through a notification has exempted the charges collected by a housing society from its members up to an amount of Rs. 7,500/- per month per member towards goods & services sourced from a third person for the common use of the members of the society. Further if the charges collected exceed Rs. 7,500/- per month per member GST would become applicable only on such members who are paying more than Rs. 7,500/-.

The charges collected by the housing society includes services which are exempt from GST such as Electricity Charges, Property Tax, Water Charges. Now a question arises whether GST would be applicable on the above charges when collected from its members, the Government in has regard has through notification exempted the societies from charging GST on any charges which do not attract GST. In other words, these charges will not be included for calculating the limit of Rs. 7,500/-.

Further, the question would then arise that if the monthly bill is say Rs. 9,000/-, will GST be applicable on Rs. 9,000/- or Rs. 1,500/- (9,000 - 7,500). In such cases GST will be applicable on the entire amount of Rs. 9,000/- and not on Rs. 1,500/-.

Input Tax Credit (ITC) on goods procured and services received by a Housing Society will be available; however, the housing society will only be able to utilize the said ITC if any output liability arises on the maintenance charges collected as discussed above.

Income Tax

The housing society is liable to deduct TDS on the services it receives from its vendor. The provisions under which TDS arises for housing societies are Salaries (Sec 192), Contract (Sec 194C) and Profession (Sec 194J).

• Salaries: If salary paid to any person exceeds Rs. 2.5 lakh per annum the employer is required to collect investment declaration, compute income tax of such employee and deduct TDS accordingly, however a salary of upto Rs. 5 lakh is not taxable.
• Contract: TDS on contract is applicable for all payments made above Rs. 30,000 in single payment or if it exceeds Rs. 1,00,000/- in a single year to a single vendor. The TDS is to be deducted at a rate of 1% for Individual and HUF and; 2% of others.
• Profession: TDS on profession is applicable for all payments made above Rs. 30,000/- in a single year to a single vendor. The TDS is to be deducted at a rate of 10% for all assesses.