Request to exempt Cooperative Housing Societies from the ambit of GST.
ALERT CITIZENS FORUM OF INDIA
A7/303, Saket CHSL, Saket Marg, Thane (W) 400601 # 8879528575
July 21, 2017
The Hon. Finance Minister,
Govt of Maharashtra,
Mantralaya,
Mumbai 400021
Respected Sir,
Sub: Request to exempt Cooperative Housing Societies from the ambit of GST.
With reference to the above, we have to submit as under:
GST on cooperative housing societies :
Our study of the subject highlights that is no reason to levy any GST on Co-operative Housing Societies or their members living in Flats / Apartments.
Societies are run on Concept of Mutuality. Hon'ble Supreme Court has upheld that no tax could be levied on organisations running on mutual Benefit basis.
I. CHS works on no‐profit, no‐loss co‐operative model. Here services are received by members from the elected members of the society. People don't have any alternative but to live in a CHS. When CHS is formed by members, they do it out of necessity; and NOT for entertainment or for profit. Housing is a basic necessity of people.
Society collections are only receiving reimbursement of actual expenses from the people who are suppose to bear them.
Slapping 18% GST on member contributions is simply a bad idea emanating from a bureaucratic machinery having no experience of CHS movement.
II. CHS has a minimal administrative structure. Its Managing Committee members work as volunteers without any salary or compensation, while engaging in full time Job or Business.
Most of CHS are unable to get qualified staff on salary. Although recent amendment of 2013 provides for training but so far hardly anything exists in reality.
CHS of any size are just not equipped to handle calculation of GST on member collections, calculation of GST on Services rendered to them by unregistered service provider under Reverse Charge Mechanism and filing of 37 GST returns.
III. Service Tax sought to be levied on CHS was set aside by a tribunal in a February 2015 order.
In a landmark decision in the case of Matunga Gymkhana, Tahnee Heights CHS Ltd (reported in STO 2014 CESTAT 792) the Mumbai Tribunal has held that Services to members of club/co‐operative housing society is not a service by one to another and therefore it is not chargeable to service tax.
We welcome GST, it is very simplified process of taxation. Since it is new, there are a lot of misconceptions/confusions and misunderstanding regarding it.
When we heard that cooperative housing societies will also be covered under the GST, we analysed the proposed bill through our chartered accountants and held discussions.
We found that it was affecting the society members.
According to the GST, in Maharashtra, if your monthly maintenance charges are in excess of ₹5,000 then the GST applicable will be at 18% of the bill.
This directly affects common members. A Cooperative Housing Society works on a no profit – no loss basis. Every society member is spending from his own pocket and there is no commercial activity nor sale purchase or profit making involved, thus, GST is an additional burden to the common member.
Society funds are collected from within the society members and the society works as trustee on behalf of the members.
Thus, GST should not be applicable. Also, the rule should be applicable to all societies not depending upon the members
In view of the above, GST should be exempt on co-operative housing societies.
We request you to consider our request and give relief to lakhs of people in the country.
Regards,
For Alert Citizens Forum of India,
Dayanand Nene Rajan Chandok
President Advisor
A7/303, Saket CHSL, Saket Marg, Thane (W) 400601 # 8879528575
July 21, 2017
The Hon. Finance Minister,
Govt of Maharashtra,
Mantralaya,
Mumbai 400021
Respected Sir,
Sub: Request to exempt Cooperative Housing Societies from the ambit of GST.
With reference to the above, we have to submit as under:
GST on cooperative housing societies :
Our study of the subject highlights that is no reason to levy any GST on Co-operative Housing Societies or their members living in Flats / Apartments.
Societies are run on Concept of Mutuality. Hon'ble Supreme Court has upheld that no tax could be levied on organisations running on mutual Benefit basis.
I. CHS works on no‐profit, no‐loss co‐operative model. Here services are received by members from the elected members of the society. People don't have any alternative but to live in a CHS. When CHS is formed by members, they do it out of necessity; and NOT for entertainment or for profit. Housing is a basic necessity of people.
Society collections are only receiving reimbursement of actual expenses from the people who are suppose to bear them.
Slapping 18% GST on member contributions is simply a bad idea emanating from a bureaucratic machinery having no experience of CHS movement.
II. CHS has a minimal administrative structure. Its Managing Committee members work as volunteers without any salary or compensation, while engaging in full time Job or Business.
Most of CHS are unable to get qualified staff on salary. Although recent amendment of 2013 provides for training but so far hardly anything exists in reality.
CHS of any size are just not equipped to handle calculation of GST on member collections, calculation of GST on Services rendered to them by unregistered service provider under Reverse Charge Mechanism and filing of 37 GST returns.
III. Service Tax sought to be levied on CHS was set aside by a tribunal in a February 2015 order.
In a landmark decision in the case of Matunga Gymkhana, Tahnee Heights CHS Ltd (reported in STO 2014 CESTAT 792) the Mumbai Tribunal has held that Services to members of club/co‐operative housing society is not a service by one to another and therefore it is not chargeable to service tax.
We welcome GST, it is very simplified process of taxation. Since it is new, there are a lot of misconceptions/confusions and misunderstanding regarding it.
When we heard that cooperative housing societies will also be covered under the GST, we analysed the proposed bill through our chartered accountants and held discussions.
We found that it was affecting the society members.
According to the GST, in Maharashtra, if your monthly maintenance charges are in excess of ₹5,000 then the GST applicable will be at 18% of the bill.
This directly affects common members. A Cooperative Housing Society works on a no profit – no loss basis. Every society member is spending from his own pocket and there is no commercial activity nor sale purchase or profit making involved, thus, GST is an additional burden to the common member.
Society funds are collected from within the society members and the society works as trustee on behalf of the members.
Thus, GST should not be applicable. Also, the rule should be applicable to all societies not depending upon the members
In view of the above, GST should be exempt on co-operative housing societies.
We request you to consider our request and give relief to lakhs of people in the country.
Regards,
For Alert Citizens Forum of India,
Dayanand Nene Rajan Chandok
President Advisor
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