A Cooperative Housing Society represents a collective effort by individuals aiming to establish a cooperative society with the objective of acquiring and developing land for residential use. The primary mission of a CHS is to offer reasonably priced housing to its members, with the society’s ownership and management being a shared responsibility among its members. In this blog, we shall see the application of GST on cooperative housing society.
Rates of GST on Cooperative Housing Society
Under the GST Act, Cooperative Housing Societies do not receive any specific exemption. Consequently, CHS is required to pay GST for the diverse services it provides, which include the upkeep of shared spaces, security, and housekeeping, all falling within the scope of taxable services as per GST regulations. It’s important to highlight that CHS can take advantage of input tax credit to balance out the GST they’ve disbursed for the goods and services used in providing these services.
The rate of GST on cooperative housing societies is set at 18% for the services they provide. However, CHS enjoys an exemption from GST registration if their annual turnover amounts to less than Rs. 20 lakhs. Furthermore, CHS has the option to choose the composition scheme if their annual turnover is below Rs. 1.5 crores. Under this composition scheme, CHS is subject to a reduced GST rate of 1% based on their annual turnover.
Compliance Requirements for GST on Cooperative Housing Society
Cooperative Housing Societies are subject to several compliance obligations within the framework of GST. The key obligations include:
1. GST Registration: CHS must register for GST if their annual turnover exceeds Rs. 20 lakhs. It’s important to note that GST registration is compulsory for CHS, even if they aren’t liable to remit GST.
2. GST Returns: CHS are required to submit GST returns, with the frequency depending on their turnover. They need to file GSTR-1, GSTR-3B, and GSTR-4 returns. The periodicity of filing can be either monthly or quarterly, based on their specific turnover.
3. Invoicing and Record-Keeping: CHS must maintain comprehensive records of invoices and other pertinent documents related to GST. They are also obligated to issue tax invoices to their members for the services rendered.
4. Input Tax Credit: CHS have the privilege of claiming Input Tax Credit for the GST paid on goods and services utilised for providing taxable services. However, it is imperative that they maintain meticulous records of invoices and other documents associated with ITC.
Adherence to these compliance obligations is important for Cooperative Housing Societies in ensuring their compliance with GST regulations and fulfilling their tax responsibilities.
Understanding Application of GST on Cooperative Housing Society in India
Cooperative Housing Societies play a crucial role in providing affordable housing to millions of people across India. However, these societies also offer various services such as maintaining common areas, providing security, and housekeeping, all of which fall under the ambit of taxation within the Goods and Services Tax framework.
1. GST Liability for CHS: It’s important to note that the GST Act does not grant specific exemptions to CHS. Consequently, CHS are obligated to remit GST on the services they render. The GST rate applicable to these services stands at 18%.
2. GST Registration: CHS must register for GST if their annual turnover exceeds Rs. 20 lakhs. This registration requirement remains in force even if the CHS is not deemed liable to pay GST.
3. Composition Scheme Option: CHS with an annual turnover below Rs. 1.5 crores have the option to select the composition scheme. This scheme entails a reduced GST rate of 1% based on their annual turnover, offering a potential cost-saving advantage.
4. Compliance Obligations: CHS face several compliance responsibilities under the GST regime. These include filing GST returns on a monthly or quarterly basis, contingent upon their turnover. The returns to be filed comprise GSTR-1, GSTR-3B, and GSTR-4.
5. Record-Keeping: CHS must maintain comprehensive records of invoices and other GST-related documents. They are also required to issue tax invoices to their members for the services they provide.
6. Input Tax Credit: CHS have the privilege of claiming Input Tax Credit for the GST they have paid on goods and services used in offering taxable services. However, meticulous record-keeping of invoices and other ITC-related documents is imperative.
Points to Consider for applicability of GST on Cooperative Housing Society
Cooperative Housing Societies are indeed liable to pay GST on the services they offer, while also being eligible to claim ITC for GST paid on goods and services used for these services. Compliance with the GST regime is essential for CHS, including mandatory GST registration if their annual turnover exceeds Rs. 20 lakhs. To avoid penalties and interest, CHS should gain a thorough understanding of GST applicability and diligently adhere to compliance obligations. Seeking professional advice from experts like StartupFino is advisable to ensure full compliance with GST laws and for GST registration.
Final Thoughts
The applicability of GST on Cooperative Housing Society is a critical aspect of their financial operations. While CHS provides essential services to residents, they must also deal with the GST framework. CHS are liable to pay GST on their services, and the GST rate stands at 18%. Compliance obligations, including GST registration, return filing, and maintaining accurate records, are essential for CHS. Those with annual turnovers below Rs. 1.5 crores can opt for the composition scheme, offering a lower GST rate at 1%. Understanding these obligations and seeking professional guidance is crucial for CHS to ensure seamless adherence to GST laws and prevent potential penalties. Hence, the implementation of GST on Cooperative Housing Society is a necessity, reinforcing the need for diligence and accurate record-keeping within the framework of this taxation system.
