Daijiworld Media Network - New Delhi
New Delhi, Apr 14: In response to growing confusion among apartment dwellers across the country, tax authorities have clarified that the Goods and Services Tax (GST) on maintenance charges is not a recent imposition, but a rule in effect since 2019.
The clarification comes amid rising anxiety and misinformation on social media and in community forums, where many residents expressed surprise and frustration over what they believed to be a new tax burden.
According to a report by NDTV Profit, the Central Board of Indirect Taxes and Customs (CBIC) laid out the rule five years ago: any flat owner who pays over Rs 7,500 per month to their Resident Welfare Association (RWA) is liable to pay 18% GST on the maintenance charges.
Though this rule has been around for a while, it has resurfaced in public discussion due to a recent tightening of compliance measures by tax departments.
However, a key 2021 judgment from the Madras High Court offered partial relief. The court ruled that GST should only be levied on the portion of the maintenance amount exceeding Rs 7,500—not on the entire sum. This decision overrode earlier interpretations, including a 2019 CBIC circular and a ruling from the Authority for Advance Rulings (AAR), which had insisted on taxing the full amount if it crossed the threshold.
Interestingly, the tax department has not challenged this High Court verdict in a higher court, meaning the ruling remains in effect, though its implementation may vary from state to state. Some local tax authorities may still adhere to the older interpretation, the report noted.
For GST to apply, two conditions must be met: the individual flat’s monthly maintenance charge must exceed Rs 7,500, and the RWA’s total annual turnover should be more than Rs 20 lakh. If both conditions are satisfied, the housing society is required to register under GST and collect tax on the relevant amount.
Despite the rule being in place, many housing societies, especially in metro cities, are reportedly not fully compliant. The tax department is now actively urging RWAs to ensure proper registration and tax collection to avoid penalties and legal complications.