GST of 18% Now Applicable on Full Apartment Maintenance Charges If It Exceeds ₹7,500 – Know What It Means for You

If you live in an apartment and are paying more than ₹7,500 a month in maintenance charges, this news might affect your monthly expenses. According to new reports, 18% Goods and Services Tax (GST) will now be applied on the entire maintenance amount if it exceeds ₹7,500. This means that for many apartment owners, their monthly expenses are likely to rise.

This change applies to all housing societies whose annual turnover exceeds ₹20 lakh. So, if your society falls under this category, you may see an increase in your monthly maintenance charges due to the added GST. Let's break this down and understand how it works and how it could impact you.

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What Is the New Rule?

Reports indicate that if an individual flat owner in a housing society is paying more than ₹7,500 per month as maintenance charges, and if the housing society’s annual turnover exceeds ₹20 lakh, then 18% GST will be applied on the full maintenance amount, not just the amount exceeding ₹7,500.

This means, if your monthly maintenance fee is ₹9,000, you will now pay 18% GST on the entire ₹9,000, not just the ₹1,500 above ₹7,500.

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Let’s Take an Example

Imagine the following scenario:

• Your housing society’s annual turnover is ₹30 lakh.

• Your monthly maintenance charge is ₹9,000.

Under the new rule, the calculation of GST will be as follows:

GST on ₹9,000 = 18% of ₹9,000 = ₹1,620

Thus, your new monthly maintenance fee will be:

₹9,000 + ₹1,620 = ₹10,620

So, your monthly expenses will rise by ₹1,620 due to the new GST rule.

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The History Behind This Rule

The change in the GST rule is not sudden. In January 2018, the GST Council increased the exemption limit for maintenance charges from ₹5,000 to ₹7,500 per month. This was done to provide relief to housing societies (RWAs) and their members.

However, now, with rising turnovers and changing policies, the GST on maintenance charges will apply to the full amount if the charges exceed ₹7,500.

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Clarification from the Ministry

According to The New Indian Express, the Press Information Bureau of the Ministry of Finance clarified that:

• If the annual turnover of a housing society (RWA) is below ₹20 lakh, it will not be required to register under GST or charge GST, even if the maintenance charges exceed ₹7,500 per month per member.

However, if the turnover is above ₹20 lakh, then:

• GST will be charged on the entire maintenance amount if it exceeds ₹7,500 per month.

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Benefits for RWAs

While this new rule may be burdensome for flat owners, there is some relief for the housing societies themselves.

• Input Tax Credit (ITC): RWAs can claim input tax credit on the GST they pay on capital goods (such as generators, water pumps, furniture) and services (such as maintenance, repairs, etc.). This credit could be passed on to the residents to reduce the overall burden.

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What If You Own More Than One Flat?

The ministry also explained how this rule will work for people who own multiple flats in the same society:

• In such cases, the ₹7,500 exemption limit will apply separately for each flat.

So, if you own two flats, you’ll get the ₹7,500 exemption for each flat, and GST will apply only on the portion exceeding ₹7,500 for each flat individually.

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What Should Residents Do Now?

Now that you know how this rule works, it’s essential to take the following steps to avoid surprises in your monthly expenses:

1. Check if Your RWA is Registered under GST:

• Ask your housing society if it is registered under GST. If the society's turnover exceeds ₹20 lakh, it will be required to charge GST.

2. Verify the Annual Turnover of Your Housing Society:

• If your society's turnover exceeds ₹20 lakh, the 18% GST will apply to the entire maintenance amount if it’s more than ₹7,500.

3. Discuss ITC Benefits:

• Talk to your RWA about whether they are passing on any input tax credit (ITC) benefits to residents. This could help reduce your overall maintenance cost.

4. Reassess Your Monthly Budget:

• Given the potential rise in your maintenance charges, review your budget and make adjustments if needed to accommodate the additional GST.

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Is This GST Fair?

Experts have mixed opinions about whether this change is fair:

Pros:

• It will increase the government’s tax collection, which can be used for public services and infrastructure.

• It promotes transparency, as RWAs can benefit from ITC, encouraging better financial management.

Cons:

• Middle-class and lower-income residents will be affected by the additional costs.

• Many flat owners may feel the extra GST burden on already high maintenance fees is too much.

• It could also lead to an increase in the overall cost of living, especially in urban areas.

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Conclusion

The 18% GST on maintenance charges is now applicable to the full amount if it exceeds ₹7,500, and if the housing society’s turnover is above ₹20 lakh. This will lead to increased monthly costs for many residents.

To ensure you aren’t caught off guard:

• Check with your RWA about GST registration and turnover details.

• Verify if any ITC benefits are being passed on to you.

• Review your monthly budget to plan for the potential increase in maintenance charges.

By staying informed and making necessary adjustments, you can manage the financial impact of this new GST rule more effectively.