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Are you paying Rs 5,000 or above every month as your society maintenance charge? If yes, your housing society will have to rework their maintenance bill heads to ensure you or your society do not have to pay Goods and Services Tax (GST).
The latest taxation structure has put out tax of 18% on co-operative housing societies that either collect Rs 5,000 per month from a society member or the annual maintenance collection of a society is above Rs 20 lakh.
"Housing societies are not for making profit. I disagree with the idea and rule of levying taxes on co-operative housing societies. It is a retrograde measure," said Chandrashekhar Prabhu, a housing activist.
According to him, with such a levy, the entire concept and logic of a co-operative organisation is lost.
In order to beat the decision, housing societies have started pondering over legalities to avoid GST net.
Advocate Vinod Sampat, co-operative housing societies consultant, told, "The rules are clear, the 18% levy is not applicable on municipal tax, property tax, water bill, non-agricultural land tax, etc. Even sinking fund is excluded as it is a fund for future. However, repair fund attracts 18% levy."
As a result, co-operative housing societies will now have to re-work their maintenance bill heads to bifurcate taxes from the overall maintenance account head. "Multiple heads will have to be created to show taxes that is being paid by the society. The balance maintenance amount and repair fund is what has to be calculated for GST," said Sampat.
Prabhu said there are several hundreds of big housing societies where maintenance amount isn't Rs 5,000, but have large membership base, which will also come under GST. "This move by the government should be protested," he said.
"Such large societies can split their buildings into separate societies, which will help in not touching the threshold limit of Rs 20 lakh. It's a one time move for a permanent solution," Sampat said.
But this division of a society into multiple ones is a cumbersome and time consuming process, Prabhu said.
A few years ago, the Maharashtra government had levied 12.36% service tax on societies; later an exemption was given from such payment by Customs, Excise and Service Tax Appellate Tribunal.
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