Voluntary Payments by Members to Housing Societies Attract GST: AAR


An Authority for Advance Ruling (AAR) has ruled that Goods and Services Tax (GST) is applicable on any voluntary payment made to a housing society by a member or a resident.

On 31st May, Maharashtra AAR ruled in the matter of Monalisa Co-Operative Housing Society said, “There is no voluntary payment made by the outgoing member but a consideration received by the society against satisfaction of the outgoing member on the supply of services received in the past during his stay as a member in society and for taxable activities of the applicant in the future pertaining to major repairs to be undertaken.”

AAR said that the money received by the society was for the supply of services. GST has a concept called “supply of services,” which is used to figure out if a transaction is taxable or not.

The AAR said that the society can’t accept a payment from a transferor or transferee that was made on their own. Such transactions are similar to service charges collected by a restaurant on which GST is applicable. Where the customer would not be able to refuse to pay the service charges if she is not happy with the services of the restaurant, it added.


Knowledge Source :

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