AAR ruling on the levy of GST on the contribution made by members of “Homeowner Association”

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The applicant is M/s Vaishnavi Splendour Homeowner Association. This association comprises 88 members. These members maintain common areas such as gardens, corridors, pathways, swimming pools, etc. This association collects annual contributions from it’s members. The contribution can be calculated on the basis of the super built up area owned by the members. They collect contributions in the name of corpus funds for future contingencies.
These were issues raised in this application with respect to levy of GST, availment of Input tax credit, exemptions and taxability of corpus fund.

The Authority of Advance Ruling (AAR) in Karnataka addressing the above issues held that the association is liable to pay both Central Goods and Service Tax (CGST) and State Goods and Service Tax (SGST) on the sum of amount received from its members. They also said that the benefit of exemption can be granted to the applicant only in the case when the contributions i.e. the maintenance charges are not more than ₹7500/- per month. In the case of inward supply of goods, the applicant can claim Input tax credit in accordance with the restrictions prescribed u/s 172(2) of the CGST Act and Rule 42 of CGST Rules and the applicant is not liable to pay CGST or SGST in the case of corpus funds.

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