GST Impact: Now Pay GST on Maintenance Charges for Flats – How Will This Affect You?

Residents of Housing Societies in Major Cities Like Delhi, Noida, and More Must Pay GST on Maintenance Charges. Here’s What You Need to Know

For millions of people residing in housing societies, particularly in cities like Delhi, Noida, and other major metropolitan areas, there's more bad news. In addition to paying rent, now residents will also have to pay GST (Goods and Services Tax) on their monthly maintenance charges. The Central Board of Indirect Taxes and Customs (CBIC) recently issued a circular clarifying this new tax rule that will affect high-rise societies and larger municipal areas across the country.

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What Is the New GST Rule?

According to the circular issued by CBIC:

• If a housing society charges more than ₹7,500 per flat per month for maintenance, and

• The annual turnover of the society exceeds ₹20 lakhs,

Then the society will have to charge 18% GST on the total maintenance fee.

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Let’s Understand With an Example – How Much Will You Have to Pay?

For example, if your society charges ₹9,000 per month as maintenance:

• GST (18%) will be ₹1,620.

• The total amount you will have to pay will be ₹9,000 + ₹1,620 = ₹10,620.

Important Note: GST will be applied to the entire ₹9,000, not just the amount over ₹7,500. So, even if you’re paying ₹8,000, GST will apply to the full amount.

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When Will GST Apply?

CBIC has laid out two clear conditions for GST to apply:

1. The society collects more than ₹7,500 per month per flat as maintenance.

2. The society's annual turnover exceeds ₹20 lakhs.

If either of these conditions is not met, GST will not be applicable.

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What Does the Maintenance Charge Include?

The maintenance charges levied by housing societies usually cover:

• Upkeep and repairs of the building

• Security services

• Lift maintenance

• Parks, clubhouses, and swimming pool maintenance

• Car parking charges

• Contributions to sinking funds

• Late fees or penalties

• NOC charges

• Water and electricity supplied by the society (via generators or borewells)

These components will now attract 18% GST if the conditions for GST application are met.

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What’s Exempt from GST?

While maintenance charges are taxable, certain charges are exempt from GST:

• Property tax imposed by municipal bodies

• Water charges levied by municipal bodies

• Non-agricultural land taxes

• Electricity bills from state electricity providers

These are statutory payments and not service fees, so they are not subject to GST.

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GST on Full Maintenance Charges, Not Just the Excess

For those societies charging ₹7,500 or more in maintenance fees, GST will be applied to the entire amount. So, for example, if the maintenance charge is ₹7,600, then GST will be applied to the entire ₹7,600, not just the ₹100 that exceeds ₹7,500.

This can lead to a higher tax burden for residents.

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What About Small Societies?

If the annual turnover of a housing society is less than ₹20 lakhs, the society:

• Does not need GST registration, even if some flats are charged more than ₹7,500 as maintenance.

• Will not charge GST, providing relief to smaller societies.

This ensures that only larger, more commercial societies will be affected by this rule.

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How Will This Affect You?

1. Increased Monthly Expenses: The new GST rule means you will have to pay an additional 18% GST on your maintenance charges, making it harder for residents already managing high living costs.

2. Rising Costs for Renters: In many cases, landlords pass on maintenance costs to renters, which means tenants will also feel the impact of this new tax.

3. Financial Pressure on Families: Families already managing household budgets will now face additional pressure as the monthly maintenance costs increase.

4. Confusion Among Residents: Many residents might not be fully aware of how this will affect their finances, leading to confusion and uncertainty.

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Why Was This GST Rule Introduced?

The rule regarding GST on maintenance charges has actually been in place since 2019, but there has been confusion among residents and housing societies about its implementation. To clarify, CBIC issued this recent circular to ensure uniformity in tax collection and clear guidelines for all housing societies across India.

The goal is to bring transparency and accountability to the taxation system while ensuring that everyone follows the same set of rules.

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How Are People Reacting to This New Rule?

• Rajeev Sharma, Noida: "It’s not just about the maintenance fee, we already pay a lot in bills and other expenses. This new tax is just another burden."

• Sunita Verma, Delhi: "Our society already charges ₹8,000 for maintenance, and now we’ll have to pay almost ₹1,400 extra every month. It's just too much!"

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What Can Residents Do?

1. Review Your Society’s Expenses: If your maintenance charges exceed ₹7,500, the society should look into reducing unnecessary expenses to keep costs below this threshold.

2. Discuss With Society Members: Residents can come together to discuss the impact of this new tax and explore ways to reduce the financial burden.

3. Request State Relief: Residents can petition state governments to consider reducing or exempting the GST on maintenance charges.

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Conclusion: How Should You Prepare?

If you live in a housing society with maintenance charges over ₹7,500 and the society’s turnover is above ₹20 lakhs, be ready to pay 18% GST on the entire maintenance amount. This new rule is here to stay, and there’s little scope for exemption.

Take time to assess your monthly expenses and budget accordingly—now’s the time to make adjustments before this new tax takes effect.

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Do you think this rule will impact your household finances? Share your thoughts on how this change might affect you!