As the GST shall roll out on July 1, flat owners with maintenance charges above Rs. 5000 shall be required to pay an additional tax of 2.5% over these maintenance charges. These charges exclude water and electricity charges, stamp duty and property tax.
Against the existing rate of 15.55%, the new rate after GST implementation shall become 18%. Those societies having an annual corpus of balance exceeding 20 lakhs shall be covered under this regime. Again, the scope of balance excludes stamp duty, water and electricity charges, property tax as well as maintenance charges deposited by apartment owners.
Tax paid on the materials bought in for the purpose of renovation, repair of maintenance of society’s premises or flats say steel, paint or cement, same shall be deducted from the total tax amount required to pay as per GST. Please note that GST is required to be paid in full at first and then credit on such tax adjustments can be claimed thereafter.
One annual return is required to be filed under the current tax regime which shall be replaced by 37 under the GST regime. A flat 18% of tax is attracted under GST against the current regime with 15% service tax, 0.005% as non-agricultural tax and 0.5% as Swachh Bharat Tax leading to a total of 15.55%
Society corpuses are predominantly going to observe the major effects of GST as these societies are stand to lose out amount on account of extra tax of 2.5% on account of GST. Additional stamp duty is required to be paid in case of delay in conveyance deed.
This tax enhancement will further add pressure on society’s corpus. Conveyance deed is handing over the ownership of land to society by builder.