Every person who is making a taxable supply i.e. supply of goods & services which are leviable to tax under GST & his aggregate turnover in a financial year exceeds 20 lacs shall be liable to register himself in the respective state. This limit is relevant for housing societies also.
This threshold limit of aggregate turnover is 10 lacs in case of 11 special category states.
The GST tax structure on housing societies
As per this provision, every housing society having receipt above 20 lacs or 10 lacs as specified shall be required to get registered under the GST. That means if a housing society collects the maintenance fees from it’s member whose aggregate exceeds 20 lacs or 10 lacs irrespective of the membership fees per member less than 5000.
The Current tax structure on housing societies
Currently the housing societies are covered under the provision of Service Tax. All apartment owners whose contribution exceeds 5000 per member & total turnover of society exceeds 10 lacs are required to be registered under Service Tax & pay the same.
Advantages of Registration under GST
GST provided input tax credit benefit for all the goods purchased or services availed by the society i.e. Lift, AMC, Housekeeping, Security, Fire AMC, repairs & maintenance, Contract Staff, Accounting & Auditing Services, Software Portal & other services.
Based on the above write up below is the summary & few queries on housing societies
1.Whether any exemption will be available on the basis of turnover?
Ans. Yes, if the Society’s aggregate receipt of the turnover is less than 20 lacs then, it is not liable to get registered under GST .
If aggregate receipt is more than 20 lacs but less than 75 lacs then, they can opt for composition scheme.
If the aggregate receipt is more than 75 lacs then they are fully covered under GST.
2.Will the billing or Invoice format of the Society have to be changed?
Ans. Yes, the format will be changed & it will be in the format given in the link Invoice Format.
3. Will the method of Accounting be changed ?
Ans.Yes the method of Accounting will be changed, since expense side benefit will be availed only when tax on those expense has been paid therefore there will be major change in recording entries.
4. Will the input tax tax credit be available on all the expenses incurred by the society?
Ans. Yes in all those expenses where input tax is paid, however not in Electricity, Stamp Duty.
5. Will the reverse charge mechanism applicable to the Society?
Ans. On certain transactions it is expected that reverse charge is applicable on society like Security Services, Accordingly GST has to be paid first & then credit benefit may be claimed.
6. Will a separate Audit be required under GST ?
Ans. Yes, every registered taxable person whose turnover during a financial year exceeds the prescribed limit of 2 crores shall get his accounts audited by a chartered accountant.
He shall an annual return using form GSTR 9B along with reconciliation statement by 31st Dec. of the next FY.
Since under GST the definition of “person” & “business activity” has included Society in the charging section, that means society is also liable under GST based on fulfillment of condition. Therefore housing societies also have to comply with GST.
If you have any further question feel free to contact us.