GST on Housing Society Maintenance: Thresholds, the ₹7,500 Rule and Invoicing

GST on housing society maintenance

Few questions in society finance generate as much confusion as this one, and much of the confusion is genuine — the position has changed over time, and one part of it has been decided differently by a High Court and by the tax department.

What follows is the framework and where the uncertainty sits. It is not a substitute for your auditor's written view, and you should not adopt a neighbouring society's treatment simply because they seem confident.

Thresholds and rates are set by notification and revised from time to time; the treatment of the per-member limit has been litigated. Confirm the current position with your auditor before you change what you charge.

Two conditions, and both must be met

GST applies to a resident welfare association or co-operative housing society's maintenance collection only when both of the following are true:

1. The society's aggregate turnover exceeds the GST registration threshold. For suppliers of services this has commonly been ₹20 lakh (₹10 lakh in some special category states). Aggregate turnover is computed across all the society's receipts, not only maintenance.
2. The monthly contribution per member exceeds the per-member exemption limit, which was raised from ₹5,000 to ₹7,500 with effect from 25 January 2018.

If either condition fails, the exemption applies and no GST is chargeable on maintenance.

This is why many small and mid-sized societies have no GST obligation at all. A society of 60 flats charging ₹3,000 a month is below the per-member limit regardless of turnover. A society charging ₹9,000 a month to 12 flats may be below the turnover threshold.

Where both are crossed, the rate on maintenance services is 18%.

The disputed part: full amount or only the excess?

This is the question societies most often get wrong, and it is genuinely unsettled.

The department's position, expressed in a CBIC circular in 2019, is that once the ₹7,500 limit is breached, GST is payable on the entire amount, not merely the portion above ₹7,500. On a ₹9,000 monthly charge, tax would be on ₹9,000.

The Madras High Court, in Greenwood Owners Association (2021), held the contrary — that the exemption applies up to ₹7,500 and GST is chargeable only on the excess. On a ₹9,000 charge, tax would be on ₹1,500. The court read the exemption as applying to the amount rather than switching off entirely once breached.

The department did not accept this as settled nationally, and the position has continued to be litigated and clarified. Societies outside the jurisdiction of a favourable ruling, in particular, have generally been advised to follow the departmental view or to take a considered position with professional advice.

Practically, this means:

• Do not adopt the excess-only treatment casually. Get it in writing from your auditor, with reasoning, and keep it on file.
• Whichever basis you adopt, apply it consistently and disclose it on the invoice.
• Do not change basis mid-year without advice.

What is excluded from the ₹7,500 computation

Not everything a society collects counts towards the per-member limit or attracts tax.

Pure agent recoveries — amounts the society collects and pays over to a third party on the member's behalf, without markup — are generally excluded. The main ones:

• Property tax paid to the municipal authority
• Water charges paid to the water utility
• Electricity charges billed by the utility, where recovered as such

To qualify, the society must genuinely act as an agent: the liability is the member's, the society collects and remits without retaining anything, and it is shown separately on the invoice.

Sinking fund and repair fund contributions are a more contested area. These are collected towards future works rather than current services, and treatment has varied. Take advice rather than assuming.

Other collections — non-occupancy charges, parking charges, hall hire, advertising and hoarding income, tower rent — are generally part of the society's own supplies and are treated accordingly. Income from non-members, such as tower rent, does not enjoy mutuality protection under income tax either, and is worth reviewing separately.

Multiple flats owned by one member

Where a member owns more than one flat, the ₹7,500 limit has been clarified to apply per flat, not per member in aggregate. A member owning three flats charged ₹6,000 each is within the limit for each, not treated as ₹18,000.

Input tax credit

A registered society can claim input tax credit on GST paid on inputs and input services used for making its taxable supplies — commonly security services, housekeeping, lift AMC, repairs and professional fees.

This matters more than committees expect. A society paying 18% on a large security contract and collecting 18% on maintenance may find the net cash outgo considerably smaller than the headline rate suggests. Where a society is close to the thresholds, the ITC position is part of the calculation, not an afterthought.

Credit is not available in respect of exempt supplies, so a society with both taxable and exempt supplies must apportion.

Compliance once registered

Registration brings ongoing obligations that a volunteer committee should plan for:

• Issue a tax invoice in the prescribed form, showing the GSTIN, the taxable value, the rate, and the tax separately from exempt and pure-agent components
• File periodic returns — outward supplies and the summary return — on time
• Reconcile input credit against the auto-populated statement
• Maintain the prescribed records
• File the annual return where applicable

Late filing attracts a daily late fee that accumulates quietly. Societies that register and then neglect returns end up with a liability that has nothing to do with the tax itself.

Never print a GSTIN on a receipt if the society is not registered. It is a straightforward misrepresentation and members are entitled to rely on it.

What to do

1. Compute your aggregate turnover for the year, across all receipts.
2. Compute the monthly charge per flat, excluding genuine pure-agent recoveries.
3. If either test is not crossed, document the position and revisit annually — societies drift over thresholds as charges rise.
4. If both are crossed, get a written opinion covering registration, the ₹7,500 basis, sinking fund treatment and ITC.
5. Restructure the invoice so exempt, pure-agent and taxable components are separately shown.
6. Diarise the return deadlines.

How this works on Plinth

Charge heads carry their own tax treatment, so pure-agent recoveries such as property tax and water charges are shown separately from the society's own taxable supplies rather than folded into one maintenance figure.

Where a society is registered, the invoice presents the taxable value, the rate and the tax as distinct lines alongside exempt components, and the basis the society has adopted is applied consistently across every flat rather than recomputed by hand each cycle. Where a society is not registered, no tax lines and no GSTIN appear at all.

Because the same postings drive the financial statements, the figures the auditor reviews and the figures on members' invoices come from one place.

Frequently asked questions

Is GST applicable on housing society maintenance charges? Only where the society's aggregate turnover exceeds the registration threshold and the monthly contribution per flat exceeds ₹7,500. If either test fails, the exemption applies.

Is GST charged on the full amount or only above ₹7,500? Contested. The CBIC circular says the full amount once the limit is breached; the Madras High Court in Greenwood Owners Association held only the excess is taxable. Take your auditor's written view and apply it consistently.

What is the GST rate on society maintenance? 18%, where it applies.

Are property tax and water charges included in the ₹7,500 limit? Amounts collected as a pure agent and remitted to the authority are generally excluded, provided they are shown separately and the society retains nothing.

If I own two flats, is the ₹7,500 limit combined? No. It has been clarified to apply per flat.

Can a society claim input tax credit? A registered society can, on inputs and input services used for its taxable supplies — security, housekeeping, AMCs, repairs — with apportionment where it also makes exempt supplies.

What if our society is not registered? Then no GST is charged and no GSTIN appears on receipts. Review the position annually, because rising charges can take a society over the threshold.

Related: how maintenance charges are calculated · society maintenance billing software · housing society accounting · statutory compliance calendar