I have booked a flat under construction of 985 sq. feet in Dhanori, Pune in 2022 and possession will be by December 2024. Now, the builder has informed us to pay the 18% GST on maintenance charges under HSN code 995419. As per the agreement, we have to pay the builder 2 years maintenance charges at the rate of Rs. 3 per sq. feet per month basis. However, we have learnt that the GST on maintenance charges is applicable only when the monthly amount exceeds Rs. 7500/-. In our case it is approx. Rs. 3000/- per month. Kindly advice whether the GST on maintenance is applicable or not.

Ans: Certainly, navigating the complexities of GST on maintenance charges can be challenging. Let's break it down clearly.

Understanding GST on Maintenance Charges

GST stands for Goods and Services Tax. It is a comprehensive, multi-stage, destination-based tax levied on every value addition. When it comes to maintenance charges for residential complexes, there are specific rules.

Maintenance Charges Calculation

In your case, the maintenance charge is Rs. 3 per sq. feet per month. With your flat being 985 sq. feet, this results in a monthly maintenance charge of Rs. 2,955. Here’s the calculation:

985 sq. feet x Rs. 3 = Rs. 2,955 per month.

This amount is well below the Rs. 7,500 threshold specified under GST rules.

GST Applicability on Maintenance Charges

The GST rules state that maintenance charges are subject to GST only if they exceed Rs. 7,500 per month. Since your monthly maintenance charge is Rs. 2,955, it does not exceed this threshold. Thus, as per the prevailing rules, GST should not be applicable on your maintenance charges.

Builder’s Request for GST Payment

Despite the above rule, your builder has requested an 18% GST on maintenance charges. This may be due to a misunderstanding or incorrect application of the rules. Builders sometimes generalize GST applicability without considering individual cases.

Actions to Take

Clarify with the Builder

First, communicate with your builder. Politely inform them that your maintenance charges are below the Rs. 7,500 threshold, as per GST regulations. Provide them with the specific rule to support your point.

Seek Professional Advice

If the builder persists, seek advice from a certified financial planner or a tax professional. They can provide a detailed analysis and even communicate with the builder on your behalf if needed.



I understand that dealing with these issues can be frustrating. Your concern is valid, and it’s essential to ensure you're not overpaying.



Your diligence in understanding the GST applicability and ensuring you pay the correct amount is commendable. It's great to see homeowners taking an active role in their financial matters.

Conclusion

In conclusion, based on the current GST rules, you should not be liable to pay GST on your maintenance charges as they do not exceed Rs. 7,500 per month. Clarifying this with your builder and seeking professional advice if needed should resolve the issue.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in