To clear up growing confusion among apartment residents, the Central Board of Indirect Taxes and Customs (CBIC) has clarified that housing societies must pay Goods and Services Tax (GST) on the entire maintenance amount if each member’s monthly contribution exceeds ₹7,500.
The clarification was issued after many residents questioned whether GST applies only to the portion above ₹7,500 or the full amount. According to the CBIC, if a member’s monthly maintenance contribution crosses ₹7,500 and the housing society’s annual turnover exceeds ₹20 lakh, GST is applicable on the full contribution, not just the excess amount.
An tax expert, explains that the recent clarification from CBIC reaffirms the GST applicability on housing society (RWA) maintenance charges—it is not the first time this has been addressed. In fact, a similar clarification was issued via a Ministry of Finance notification dated 22 July 2019, which stated that RWAs (Resident Welfare Associations) are exempt from paying GST if individual member contributions are below ₹7,500 per month, regardless of the RWA’s annual turnover.
The current threshold of ₹7,500 has been in effect since January 2018, when it was revised from the earlier limit of ₹5,000.
As per the prevailing GST rules, RWAs are required to collect GST on monthly maintenance charges only if both of the following conditions are met:
If both conditions are satisfied, GST is applicable on the entire maintenance amount, not just the portion exceeding ₹7,500. This clarification is consistent with the government’s earlier communications and serves to eliminate ongoing confusion among RWAs and homeowners regarding GST liabilities, he said.
“Since this has been an existing rule for several years, the recent clarification is unlikely to lead to any increase in monthly maintenance costs,” he said.
Kerala High Court strikes down 2021 GST Amendment as ‘unconstitutional’
In a significant ruling delivered in April 2025, the Kerala High Court struck down as unconstitutional and void the amended provisions of the Central Goods and Services Tax Act, 2017, along with corresponding sections of the Kerala GST Act. These provisions had enabled the levy of GST on services provided by clubs or associations to their own members.
The case in question involved the Indian Medical Association, which runs self-help schemes where members support one another—and their families—during times of hardship, such as disability, death, or legal troubles. The IMA argued that such internal transactions should not be treated as ‘supply’ under the GST framework and, therefore, should be exempt from taxation.
The Kerala High Court has declared the 2021 amendment to the GST law ‘unconstitutional,’ marking a major victory for residential welfare associations (RWAs), private clubs, societies, and other member-based organizations. The court underscored that, under the Constitution, a valid taxable transaction requires two distinct parties—a supplier and a recipient. As a result, self-supply or self-service cannot be taxed, say experts.
The 2021 amendment had attempted to bring transactions between clubs and their members under the ambit of GST by treating them as taxable supplies. This move was widely viewed as an attempt to override the Supreme Court’s landmark 2019 ruling in the Calcutta Club case, which held that such transactions do not amount to “service” under pre-GST laws.
Although the 2019 Calcutta Club ruling pertained to the pre-GST regime, its interpretation of the principle of mutuality has significant implications for GST as well, say experts.
Here’s what experts say about the concept of ‘supply’ between residents and housing societies
Experts say that based on the judgement, one may contend that there is no supply of services between RWAs and its members and accordingly, GST is not liable to be paid. But it is important to note that the taxability of such organizations has been a contentious issue for years.
“As per GST rate notifications, an 18% GST applies if a housing society’s monthly contribution from a member exceeds ₹7,500. While one may argue there’s no actual ‘supply’ between residents and the society especially considering the recent decision by the Kerala High Court, however, the tax department clearly intends to treat these contributions as taxable and has been consistently moving in that direction. The matter is likely to go to the Apex Court to attain finality,” another tax expert said.
Prima Facie, the decision (Kerala High Court) seems to do away with the requirement of paying any GST. However, It would be too early to take any position and is advisable to await for finality by the Supreme Court, another tax expert said.
The recent decision of Kerala High Court has once again brought into question the repeated amendments being introduced in the law to overcome the settled jurisprudence, in this case, siding with the assessee, he said.
The Kerala High Court was concerned with the issue of constitutional validity and retroactive operation of amendment made in GST law which deemed the persons and its members as two separate persons in light of the principle of mutuality affirmed by the Apex Court in case of Calcutta Club. The High Court after taking into consideration the fact that the Constitution is not amended suitably to remove the concept of mutuality from the concepts of supply and service held the amendment in GST Act to be ‘unconstitutional.’ Hence, the retroactive amendment in law was also held to be unjustified, he explains.
“While the verdict seems to impact the transactions between RWAs pan India and their members, it calls into question the broader issue of constitutional validity of the concept of ‘distinct persons’ introduced under the GST law,” he said.
What do homebuyers say about GST on maintenance charges above ₹7,500?
Homebuyers, particularly in Mumbai, have voiced strong concerns over the imposition of GST on maintenance charges exceeding ₹7,500. Many homeowners believe that this move could encourage increased use of cash transactions in housing societies, as a way to underreport actual collections and avoid paying GST. They argue that such a policy may inadvertently promote non-transparent practices rather than improving compliance.
The 18% GST on maintenance charges is yet another burden on the middle class, which is already grappling with rising inflation,” says a resident of Mumbai’s Borivali area. “Although our housing society collects only ₹2,000 per month per household, our total annual collection exceeds ₹20 lakh, making us liable to pay GST. This kind of imposition will only push societies to rely more on cash transactions to avoid reflecting the full amount in official records.”
The Director of the Karnataka Homebuyers Forum, has called for a re-evaluation of the GST policy on maintenance charges. He argues that since maintenance services are essential and non-commercial, they should be exempt from GST. According to him, the current taxation only adds to the financial burden on residents, who are already voluntarily contributing to the upkeep and functioning of their communities.
“Homebuyers are only trying to recover the actual maintenance costs they incur,” said Anil Kalgi, president of the Bangalore City Flat Owners’ Welfare Association. “So when residents contribute to cover that spend every month through maintenance, there’s no profit involved. If it’s a no-profit, no-loss scenario, then there shouldn’t be any additional GST applied.”
He pointed out that in cities like Bengaluru, major expenses like water and electricity are often included in the monthly maintenance bill, especially since many apartments rely on external water or power sources. “Both water and electricity are GST-exempt individually—but the moment they are included in maintenance charges, they attract 18% GST. That’s an unfair burden on homeowners.”
He stressed the need for clarity and fairness in how these charges are handled. “If these are reimbursements to the society and not income, they should be treated as such. Societies should be allowed to collect them without being taxed.”
“In one apartment complex in Whitefield, the monthly water bill alone touches ₹10 lakh, with electricity adding another ₹5 lakh—for just over 200 flats. If GST is levied on the entire maintenance amount, including these essentials, the additional tax burden will be enormous and hard to justify,” he said. “It’s difficult to imagine the kind of impact this will have on middle-class homeowners already stretched by high monthly costs.”
The President, Noida Federation of Apartment Owners Associations, said that the ever increasing tax liabilities on apartment dwellers has made living in apartments a bigger challenge nowadays. Over and above there is nothing much value addition being done by administration for ease of living in high rise societies. “We still face challenges on basic amenities like quality of drinking water, no break power supply, quality of construction by builders and several other civic issues,” he added.
