50,000 housing societies in Mumbai Metropolitan Region to fall under GST net

Transfer fees which are paid by incoming and outgoing members to the society, contribute to the society’s annual turnover.

Around 70,000 co-operative Housing Societies (CHS) in Maharashtra will have to register under the Goods and Services Tax (GST) regime as their annual turnover (collections) is likely to exceed the Rs 20-lakh mark, according to a report by The Times of India.

Out of the 70,000 such societies, as many as 50,000 are in the Mumbai Metropolitan Region (MMR), senior co-operative officials have confirmed.

Transfer fee, which is paid by incoming and outgoing members to the society, contributes to the society’s annual turnover.

The model bylaws under the Maharashtra Co-operative Societies Act has placed a cap of Rs 25,000 on such transfer fees. However, in reality, the fees exceed the limit and run into lakhs, the report states.

Ramesh Prabhu, chairman of the Maharashtra Societies Welfare Association told the newspaper, “In such instances, any transfer fee paid to the society by the new owner on exchange of ownership of flat will be taxable under GST at 18%.”

After a society is registered under the GST regime, it must comply with the provisions of the reverse charge mechanism.

Under this mechanism, if the society makes payments to unregistered service providers such as cleaners, plumbers and electricians, the society will have to bear 18 percent GST on such transactions and must file relevant forms on the GSTN portal.

Government had earlier stated that GST will be levied on maintenance charges collected from house owners only if the society’s annual collection is Rs 20 lakh or more and the monthly maintenance charge is more than Rs 5,000 per member.

source:http://www.moneycontrol.com/news/india/50000-housing-societies-in-mumbai-metropolitan-region-to-fall-under-gst-net-2516851.html

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