By IndiaHub 
Responding to a question, the Ministry of Finance addressed key concerns raised by Members of Parliament regarding GST compliance for residents, the role of apartment associations, and the rationale behind the 18% GST levy on maintenance charges.
Members of Parliament asked several questions regarding the GST levied on apartment maintenance charges. ET Wealth online tells you the government’s response regarding its efforts aimed at improving clarity, reducing confusion around GST status, and alleviating the compliance burden.
Manickam Tagore B and Suresh Kumar Shetkar, Members of Parliament, Lok Sabha, asked the following questions from the government about the GST on apartment maintenance charges:
The manner in which the government ensures that residents of smaller apartments with maintenance charges less than Rs 7,500 (per month) are not burdened by the GST compliance requirements.
The government in Parliament replied: GST rates and exemptions are prescribed on the recommendations of the GST Council, which is a constitutional body comprising both the Centre and states/UTs. No GST compliance requirements have been placed upon the residents, who are the service recipients in this case, irrespective of the amount of maintenance paid. Compliance requirements, if at all, are placed upon the apartment associations, who are the service providers. Moreover, as per the recommendations of the GST Council, services provided by an apartment association (an unincorporated body or a registered non-profit entity) to its own members against maintenance charges up to Rs 7,500/- per month per member are already exempt from GST.
The measures taken/to be taken by the Union government to address the concerns of residents who are unsure about their apartment’s GST status and may need to obtain an official letter.
The government in Parliament replied: As stated above, no GST compliance requirements have been placed upon the residents, irrespective of the monthly maintenance amount paid. The compliance requirements are placed upon the suppliers, i.e., the apartment associations, who are required to register under GST if their aggregate turnover exceeds Rs 20 lakhs (Rs 10 lakhs in special category states) in a financial year. Such associations are required to pay GST only where the maintenance charged is more than Rs 7,500 per month per member.
Is 18% GST levied on maintenance amount when housing society is managed by builder?
On the recommendations of the GST Council, considering the importance of the issue, the Central Board of Excise and Customs has issued Circular No.109/28/2019-GST dated 22.07.2019 wherein all relevant aspects pertaining to the issue have been clarified. Further, the Ministry of Finance has also issued two press releases dated 13.07.2017 and 07.02.2018 to inform the general public. This has been done to provide clarity to the general public. Events like Taxpayer Samvad, workshops, and awareness programs are regularly being organised for information dissemination and awareness through GST facilitation centres. These initiatives are designed to help taxpayers accurately assess their tax liability. Further, there is no requirement under CGST law to obtain any official letter from the residents or apartment associations regarding their apartment’s GST status.
The manner in which the government ensures that apartment associations are equipped to handle the increased compliance burden and paperwork requirements under GST.
The government in Parliament replied: The compliance requirements for all persons, including apartment associations, are the same under GST once they cross the threshold for registration. Apartment associations have not been burdened with any additional compliance requirements under GST. Initially, services by an apartment association to its own resident members against maintenance charges up to Rs 5,000 per month were exempt. However, the exemption limit was enhanced to Rs 7,500 per month per member in accordance with the recommendations of the GST Council in its 25th meeting held on 18.01.2018. Apartment associations having maintenance charges up to Rs 7,500 per month per member or having aggregate turnover of goods and services below the threshold need not be registered under GST.
The rationale behind imposing an 18% GST on apartments having maintenance charges of Rs 7,500 or more per month, and how this will impact residents
The government in Parliament replied: GST rates and exemptions are prescribed on the recommendations of the GST Council, which is a constitutional body comprising both the Centre and states/UTs. The services by an apartment association to its own resident members, where the maintenance charges are greater than Rs 7,500, are taxed at the rate of 18% on the recommendations of the GST Council. The limit of Rs 7,500 was also prescribed on the recommendations of the GST Council in its 25th meeting, in which a decision was taken to increase the limit from the previous level of Rs 5,000.
The manner in which the government addresses potential issues arising from penalties and fines imposed on apartment associations for non-compliance with GST regulation?
The government in Parliament replied: If any due tax has not been paid under the GST Act, the taxpayers are provided with an option to pay either no penalty or a reduced penalty, provided they are ready to pay the due tax within a specified time period. Furthermore, relief was also provided to those taxpayers vide Notification No. 21/2024-Central Tax, dated 8th October, 2024, issued under Section 128A of the CGST Act, who have received notices or orders under Section 73 of the CGST Act pertaining to the period from 1st July 2017 to 31st March 2020, so as to make payments for tax payable with waiver of interest or penalty until 31st March, 2025. Apartment associations that fell under such a category were eligible to avail benefits of Section 128A.