• Notification Date: 25-07-2023
• Notification No: N/A

GST Applicable if Housing Society’s Turnover is more than ₹20 Lakh

The Maharashtra government issued a circular on July 14, 2023, stating that the stamp duty to be paid by the original members of the society on the allotment letter / agreement shall be Rs1,000 only if the society is going for self-redevelopment. While dealing with writ petitions filed by builders on the issue of stamp duty to be paid by the original members on the PAAA in redevelopment, the Bombay High Court vide its order of February 2023 has observed that in self-redevelopment there is no need to execute the PAAA as the society will be doing the development on its own. Quashing government circulars dated June 23, 2015, March 30, 2017, which provide for the applicable rate of stamp duty, the high court held that the stamp duty payable for agreement for sale under redevelopment project shall be only Rs100 and no more. This judgement is made applicable not only to the petitioners but for all redevelopment of housing societies whether through a builder or self-redevelopment. 

The government seems to have missed taking cognizance of this judgment while issuing the circular dated July 14, 2023. There being no “stay order” in the public domain on the high court judgment, you will be required to pay stamp duty of Rs100 only on the allotment letter / agreement issued by your society for the new flat if you are not purchasing any additional area in the redeveloped building. In case you purchase any additional area excluding the fungible area, you will be required to pay the stamp duty as per market value. 

GST is applicable if the annual turnover of the Society is more than Rs20 lakh and the society is collecting more than Rs7,500 per month per member towards maintenance charges. If the annual turnover of the society is less than Rs20 lakh and the maintenance charges are only up to Rs7,500 per month per member, GST will not be applicable. If the maintenance charges are more than Rs7,500 with an annual turnover of Rs20 lakh, GST applicable will be on the entire amount. 

For example, if your society maintenance charges are Rs8,000 per month per member, GST will be applicable on the entire Rs8,000 considering the annual turnover is more than Rs20 lakh. GST is applicable per flat, as such you will be required to pay GST in respect of two flats if the society maintenance is more than Rs7,500 and if the annual turnover is more than Rs20 lakh. 

In case your society is willing to undergo the process of redevelopment, consent of 50% of the total members is necessary as per the current norms. The developer cannot ask your society to obtain 100% consent. Your developer may be avoiding the risk of litigation at a later stage; hence he must be seeking consent from all members. In such a case the society and developer should speak with the 13 non-consenting members and understand their concerns.