Santosh Maskar, chairman of the Roseland Cooperative Housing Society in Pimple Saudagar, is unclear about the status of his housing society under the new Goods and Services Tax (GST) regime. “Our CA told us GST will be applicable only if the monthly maintenance is above Rs 5,000 per month. But, I also read somewhere that GST will be applicable if the yearly turnover is over Rs 20 lakh. By that definition, we will come under the GST ambit, as our yearly turnover is well over a crore,” he said.
The yearly turnover of a housing society is the amount collected from maintenance charges etc, minus the amount spent on providing services, making new constructions etc. Maskar is yet to apply for the provisional GST number and is waiting for a clarification from the Pune District Cooperative Housing Federation (PDCHF) limited. GST’s ‘one tax one nation’ policy presents a challenge for housing societies which, till date, were beyond the ambit of the service tax. Housing societies with a yearly turnover of above Rs 20 lakh will be charged a 5 per cent tax on the service they provide.
Officers of the Pune Zone of GST said the tax will only be applicable to housing societies if they provide any service — such as swimming pools, WiFI — to their members. “Societies are also recipient of certain services, such as security, gardening etc, so in those cases they will be exempt from the tax. But if they take up construction, then they will be charged,” said the officer.
Several housing societies, meanwhile, seem to be unclear about their status under the new tax regime. In Pune, records with the Cooperative Commissioner show there are more than 20,000 housing societies, whose yearly turnover is likely to be more then Rs 20 lakh. While such societies should come under the GST, majority of them are yet to initiate any procedure to get their provisional GST number. Suhas Patwardhan, chairman of PDCHF, said the organisation has written to Finance Minister Arun Jaitley, seeking an exemption for housing societies. “If housing societies are brought under the GST regime, not only will it increase the hassle, but it will also translate into higher maintenance bills for its members,” he said.
“As per the information available to us, GST is applicable for housing societies if the monthly maintenance charges are more than Rs 5,000 or annual turnover is more than Rs 20 lakh. It would be good if the government can clarify what all heads should be included under maintenance charges. In fact, most of the housing societies, being co-operative societies, feel that they should be kept out of the GST’s ambit,” said Krunal Bauskar, secretary, Kumar Shantiniketan phase-1 Co-operative Housing Society Ltd. Maskar said in case Roseland society has to pay GST, there would be no other option but to pass the financial burden on to their members “This will lead to increased expenditure for our members,” he said.