GST on Co-operative Housing Societies or Resident Welfare Associations

Goods and Services Tax (GST) is a tax levied on the supply of goods and services in India. It replaced multiple indirect taxes such as Central Excise Duty, Service Tax, and Value Added Tax (VAT). All businesses, including co-operative housing societies and resident welfare associations, are also required to comply with GST regulations.

Co-operative housing societies or Resident Welfare Associations (RWA) are formed to promote the welfare and interests of residents. These societies or associations are registered under the Co-operative Societies Act or the Societies Registration Act. They are primarily responsible for maintaining the common areas, amenities and services within the society or association.

After the introduction of GST, co-operative housing societies and RWAs are also required to register under GST if the annual turnover exceeds INR 20 lakhs. In this article, we will discuss the implications of GST on co-operative housing societies and RWAs.

Registration under GST

Co-operative housing societies or RWAs with an annual turnover of more than INR 20 lakhs are required to register under GST. However, if the turnover is less than INR 20 lakhs, registration is not mandatory. In case the turnover exceeds INR 20 lakhs, the society or association is required to obtain a GST Identification Number (GSTIN).

The registration process for co-operative housing societies or RWAs is similar to that of other businesses. The society or association is required to apply for registration on the GST portal and submit the relevant documents. Once the registration is approved, the society or association is required to file GST returns on a regular basis.

GST Rates for Co-operative Housing Societies or RWAs

Co-operative housing societies or RWAs are classified as non-profit entities under GST. As a result, these entities are eligible for certain exemptions and lower GST rates.

Rentals received by co-operative housing societies or RWAs from members are exempted from GST. However, if the society or association is collecting a maintenance fee or any other charges from the members, the same is subject to GST.

The GST rates for co-operative housing societies or RWAs are as follows:

1. Maintenance charges up to INR 7,500 per month per member - Exempted from GST

2. Maintenance charges more than INR 7,500 per month per member - GST applicable at 18%

3. Other charges collected by the society or association - GST applicable at 18%

It is important for co-operative housing societies or RWAs to maintain proper records of the maintenance charges and other charges collected from the members. The society or association is also required to issue GST-compliant invoices to the members for the charges collected.

Input Tax Credit (ITC)

Input Tax Credit (ITC) is a mechanism where the GST paid on purchases can be set off against the GST liability on sales. Co-operative housing societies or RWAs are also eligible for ITC on the GST paid on goods and services purchased for providing services to the members.

However, ITC cannot be claimed on services such as security services, parking charges, or any other services provided by the society or association for the common use of the members. These services are exempt from GST, and therefore, ITC cannot be claimed on the GST paid on these services.

GST Compliance for Co-operative Housing Societies or RWAs

Co-operative housing societies or RWAs are required to comply with the GST regulations and file GST returns on a regular basis. The GST returns are required to be filed monthly, quarterly, or annually, depending on the turnover and other criteria.

The society or association is required to maintain proper records of the invoices issued and received, and the GST paid and collected. The records should be maintained for a minimum of six years from the end of the financial year to which they relate.

Conclusion

Co-operative housing societies or RWAs are required to register under GST if the annual turnover exceeds INR 20 lakhs. The society or association is required to comply with the GST regulations and file GST returns on a regular basis. The GST rates for co-operative housing societies or RWAs are lower compared to other businesses. It is important for co-operative housing societies or RWAs to maintain proper records and issue GST-compliant invoices to the members.