Whether GST exemption limit, of Rs.7500 per member per month OR threshold limit of Rs.20 lakh, applicable to "Commercial Building Service Society" ? Also having other related queries.

Posted by: TaxField on 13/10/2020 9:57 PM

The above query, among others, received from Mr. Piyush via Contact-us page are as under :-
 

THE QUESTIONS ARE AS UNDER-

1) MY CLIENT IS SERVICE SOCIETY IN COMMERCIAL BUILDING. IT COLLECT 5000/- PER MONTH FROM ITS MEMBERS FOR MAINTENANCE.   DOES THIS 5000/- ATTRACTS GST OR IT COVER UNDER EXEMPTION OF 7500/ PER MONTH

Ans : You have not specified how much members in that Commercial Building, any way.  If total annual turnover of such Commercial Building Service Society is less than Rs.20 lakh (which covers all type of receipts towards maintenance, whether monthly or quarterly or half-yearly or yearly or advance maintenance), then no GST registration required, however, the member-wise exemption of Rs.7500 per member per month is NOT available to Commercial Building Service Society as such exemption is only available to Residential Building Service Society.

2) EXEMPTION OF 7500 / AS PER ENTRY 77 OF NOTIFICATION 12 DOES IT ALSO APPLY TO SERVICE SOCIETY FOR COMMERCIAL BUILDING. OR ATTRACT GST ?

Ans : No, this exemption of Notification No.12/2017-CT(Rate) is not applicable to Commercial Building Service Society, but only applicable to Residential Building Service Society.

3) MY CLIENT IS ALSO TAKING 85000/ INTEREST FREE DEPOSIT FROM ITS MEMBERS. DOES THIS DEPOSIT ATTRACT GST OR NOT. AND FOR CALCULATION OF AGGREGATE turnover OF 2000000/- SHOULD WE CONSIDER THIS DEPOSIT AS TURN OVER OR NOT ?

Ans : Purpose of deposit not mentioned by you, so no comments.  If this deposit is adjustable towards maintenance then certainly it would be part of annual turnover for the purpose of computing threshold limit of Rs.20 lakh.

4) MY CLIENT IS ALSO TAKING TWO YEARS MAINTENANCE CHARGE IN ADVANCE  5000* 12*2 = 120000/-
DOES THIS ALL AMOUNT OF Rs.120000/- ATTRACT GST IN CURRENT YEAR OR SHOULD BE SPLIT IN TWO YEARS AND FOR CALCULATION TURNOVER LIMIT OF 20,00,000/- SHOULD WE CONSIDER 60000/- OR 120000/-?

Ans : Yes Rs.1,20,000/- would be considered for computing annual turnover, such deposit would be nothing but advance maintenance, so in other words, whatever amount received during a financial year would be considered for computing threshold limit of Rs.20 lakh for GST registration, irrespective of the fact that it is pertaining to one month OR for no. of months.

5) WHICH AMOUNT SHOULD CONSIDER FOR CALCULATING THRESHOLD LIMIT FOR GST REGISTRATION ? HOW TO CALCULATE TURNOVER LIMIT FOR GST REGISTRATION ?

Ans : For computing annual turnover threshold limit for GST registration, all taxable as well as exempted amounts are added together, but excluding the amounts on which GST is payable on RCM basis.

6) IN THIS CASE HOW TO CALCULATE THRESHOLD LIMIT FOR GST REGISTRATION ?

Ans : All the amounts received by the Commercial Building Service Society towards Sinking fund, Repairs & Maintenance Fund, Car Parking Charges, Non-occupancy Charges, Transfer Fees, or Charging of interest for late payment on any or all of such charges would be added together for computing GST registration threshold limit of Rs.20 lakh. 

However, the charges being collected separately & paid by such Society towards GST exempted goods/services are not added to arrive the annual threshold turnover limit of Rs.20 lakh.  For example, Property Tax, Water Tax, Electricity Charges and other statutory levies which are exempted from GST are excluded from GST registration exemption limit of Rs.20 lakh. But if these charges are collected by the Society for generation of electricity by Society’s generator OR to provide drinking water facility OR any other service, then such charges collected by the society are liable to GST.

7) ANYTHING IMPORTANT ABOUT GST LIABILITY ON SERVICE SOCIETY WHICH IS NOT MENTIONED IN THIS QUERY, THAT MAY PLEASE BE GIVEN.

Ans : Under GST, the tax burden on Building Service Societies will be lower if they avail ITC in respect of GST paid by them on capital goods (generators, water pumps, television, camera(s), furnitures etc.), consumable goods (taps, pipes, other sanitary/hardware fittings etc.) and input services such as annual repair and maintenance services of Lifts, Water Pumps, Generators, Fire Hydrants, etc.

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