GST on Housing Maintenance / CAM Charges

The number of people living in apartments or villas has recently increased dramatically. As more families choose to live in gated communities, high-rise societies, and so on, apartment culture is becoming the new normal. Security, lifts, clubhouses, maintenance, and other factors may all contribute to a growth in apartment culture.

However, in order to use all of the services, residents must pay a fee known as "maintenance charges". Residents are required to pay common area maintenance (CAM) charges to the "Housing Society" founded for the society. There are numerous questions about the imposition of GST on maintenance expenses.

Housing Society charges are often known as common area maintenance (CAM) charges.

GST on Housing Maintenance Charges — Explained

This document covers

Meaning of Housing Society
Meaning of Maintenance charges
Taxability under GST
Claim of Input Tax Credit by housing society
Filing of GST Returns
How the CAM charges will be calculated on Flats or Villas in Gated Community

1. Meaning of Housing Society

Housing Society is a group of apartments or flat owners in a building or gated community who come together to take care of the community or building and its facilities.
Housing Society is also called Co-operative Housing Society or Resident Welfare Association (RWA)
Housing Society is a registered entity with separate legal existence. Once the housing society is registered, it needs to apply for PAN separately as association of persons (AOP)

2. Meaning of Maintenance charges

Maintenance charges are the monthly amount that every flat owner must pay to the housing society to manage the common facilities of the community or building.
The following types of expenses are covered in maintenance charges
- Property Tax
- Electricity charges
- Water tax
- Car parking charges
- Repairs and Maintenance charges (lift, plumbing, building etc)
- Garden and clubhouse upkeep
- Administrative expenses
- Non occupancy charges
- Simple interest for late payment
- Insurance
- Sinking funds, corpus fund etc

3. Taxability under GST

Services provided by a housing society to its members are treated as services provided by 1 person to another person
The housing society is required to register under GST if the turnover exceeds Rs 20 lakhs (Rs 10 lakhs in case of special category states of Manipur, Mizoram, Nagaland and Tripura)
The applicability of GST on the maintenance fees paid by flat owners to Housing society are as follows

Note 1 : While calculating Rs 7500, government payments like property tax, electricity charges, water charges should not be included.

Note 2 : If a person owns more than 1 flat, Rs 7500 limit is applicable for each flat separately.

Note on Registration:

GST registration requirement is as follows

Turnover	Monthly Maintenance	Requirement of GST registration
More than Rs 20 lakhs ^*	7500 or less than Rs 7500 ( <=7500 )	Not required (Optional)
More than Rs 20 lakhs ^*	More than Rs 7500 ( >7500 )	Mandatory
Less than Rs 20 lakhs ^*	7500 or less than Rs 7500 ( <=7500 )	Not required (Optional)
Less than Rs 20 lakhs ^*	More than Rs 7500 ( >7500 )	Not required (Optional)

^* 10 lakhs in case of special category states of Manipur, Mizoram, Nagaland and Tripura

4. Claim of Input Tax Credit by housing society

The housing society can claim the input tax credit of GST paid on purchases of capital goods like generators, water pumps, furniture etc, input goods like pipes, hardware, sanitary etc and input services like repairs and maintenance

5. Filing of GST Returns

The housing society is required to file Monthly or quarterly GST returns in GSTR 3B, GSTR 1 depending on the turnover.

6. How the CAM charges will be calculated on Flats or Villas in Gated Community

The common area maintenance charges (CAM) will be mostly calculated as follows

Per Sq. Ft of Super Built up area or Carpet area: This method is widely utilized in numerous gated communities, as there is a historical consistency in unit sizes within the community. (Calculated for eg: Rs 25 * 2100 SFT; Rs. 15 * 1750 SFT etc.)
Fixed Amount per unit (Villa or Flat): CAM will be charged at fixed rate per month like Rs 7000 per month or Rs 10000 per month (Calculated based on the total maintenance charges / total number of units).

OBSERVATION

Currently, the dimensions of the units within the same gated community are varying, making the SFT-based method less suitable, as all residents share the common amenities. The by-laws are instrumental in fostering consensus and acceptance.

The common factors that influence the CAM charges are

Size of property: CAM will be charged based on the area of the property i.e., built up area, super built-up area. Ex: Rs 250 per Sq ft for 2000 Sq ft property
Market Rates: The property owners are required to pay CAM based on market rates
Number of Amenities: CAM will be higher if the community has more facilities like gym, library, playground, banquet halls etc
Location of the property: sometimes location of the property also plays a major role in determining the CAM charges

NOTE

Recently, a civil court has made a decision in favor of flat owner. In Arun Kumar Rao vs Purva Seasons Owners Association, the court has ruled that all the services of common area are enjoyed by all members of gated community irrespective of flat size and the association cannot charge CAM based on higher flat sizes. The court has directed the association that it cannot charge CAM based on area size and restricted it from changing its bye laws