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GST on Housing Society Maintenance: What Happens When Builder Manages the Property?

Managed Services

Business Honor
24 April, 2025

Confusion grows over 18% GST when builders handle society maintenance duties.

Housing society members in builder-managed societies are generally confused about Goods and Services Tax (GST) on monthly maintenance charges. An example of such confusion is whether 18% GST is remitted when the property is being held by the builder and not a residents' association.

Under GST provisions, the charge for maintenance on residents is taxable at 18% when both conditions are satisfied: all the members pay more than ₹7,500 per month, and the total annual collection by way of charge exceeds ₹20 lakh. The provision covers a case where maintenance is done either by a Resident Welfare Association or a developer.

Constructors continue to take care of the society in most housing societies, particularly new ones, until an RWA is formed. The constructor will still provide services such as cleaning, security, power backup and general maintenance. If the total amount received by the constructor by way of maintenance exceeds ₹20 lakh in an annum, and the contribution on a monthly basis per flat exceeds ₹7,500, GST is payable.

But if the amount received is less than these levels, no GST is charged. When an RWA is formed and takes charge legally, it will be required to register under GST when it crosses the same levels.

Experts tell the residents to see if the builder or the society is GST registered and if there are charges on their bills with GST. They also suggest asking for proper tax invoices.

The bill is intended to introduce transparency and taxation accountability in the maintenance of residential complexes. But it has even brought panic to residents who are of the belief that the additional 18% is an additional burden to living expenses.

As more housing societies are being developed in India, news of GST bills on maintenance is a worry for more builders and residents.