image
Subscribe To Newsletter
[newsletter_signup_form id=1]
Connect with us
Totalityre

Residential News

Homeowners Contribution To Corpus Fund Of Cooperative Housing Society Taxable

Published

on

Contributions made by homeowners of a cooperative housing society (CHS) towards a sinking fund meant for the future upkeep of the society will be subject to the goods and services tax (GST).

The Karnataka Authority for Advance Rulings (AAR) has held that such contribution towards the sinking fund (also termed as corpus fund) is not a “deposit”, but in fact, an “advance” for future supply and thus liable for 18 percent GST.

The AAR ruling came on a petition of the residents’ welfare association (RWA) of the Bengaluru-based Olety Landmark Apartments.

The main grounds petitioned by the RWA was contributions made by members towards the sinking fund were in the nature of a deposit for future planned or unplanned events and not for the purpose of supplying any goods or services.

Hence, as no element of supply was involved, such contributions should be tax-exempt.

But the AAR said that contributions by members were not a deposit as the sum was not coming back to them at any future date. It is, in fact, was an advance that members have to extend to the CHS for any future supplies whether planned or unplanned or of any specific nature. Thus, as per GST laws, is liable to tax.

The AAR also addressed the question of the applicability of GST on contributions at the time of making it. There was a suggestion that tax should be triggered only at the time of utilisation of the fund. But AAR GST is triggered on receipts.

This means that the CHS would have to collect and pay GST against the contributions to the sinking fund. But such GST collections will only have to be made if the charges collected from members exceed Rs 7,500 per month, per member.

Source: IANS

(The story has been published from a newswire without modifications to the text. Only the heading has been changed)

ALSO READ: Maharashtra Lockdown To Have Rs 40K Cr Hit On National Economic Growth: CARE Ratings

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Trending

© 2021 RealtyNXT | All Rights Reserved.