GST on apartment maintenance: A tax firm clears the air on ₹7,500 rule confusion

Panic over 18% GST on apartment maintenance is back, fuelled by viral posts and outdated info. But tax advisory firm efiletax says the law is clearer than most think, thanks to a 2021 court ruling that many RWAs still overlook.

According to efiletax, recent GST compliance drives have triggered a fresh wave of confusion among Resident Welfare Associations (RWAs) and apartment residents. 

The biggest misconception? That if monthly maintenance exceeds ₹7,500 per flat, the entire amount is subject to 18% GST. This belief is rooted in a 2019 CBIC circular and a ruling by the Authority for Advance Ruling (AAR), both of which stated that crossing the ₹7,500 threshold nullifies the exemption.

However, efiletax points to a crucial shift in interpretation brought about by the Madras High Court in the 2021 Greenwood Owners Association v. Union of India case. The court struck down the CBIC circular and overruled the AAR’s view. 

It ruled that only the amount exceeding ₹7,500 per month is taxable, not the full amount.

But the clarity ends there. This judgment currently applies only in Tamil Nadu and hasn't been challenged in the Supreme Court. That means RWAs in other states may still be assessed under the earlier, harsher interpretation, depending on how local GST officers view the rule.

As for registration, efiletax explains that an RWA must register under GST if annual maintenance collections exceed ₹20 lakh and monthly contributions per flat go beyond ₹7,500. Once registered, the RWA is required to collect and pay 18% GST on applicable charges.

To limit GST liability, efiletax suggests splitting invoices. Fixed charges—like security and housekeeping—can be kept under ₹7,500 to remain exempt. 

Variable expenses, such as sinking funds or major repairs, can be invoiced separately, reducing the taxable portion.

The firm warns that until there’s a uniform directive—either from the GST Council or the Supreme Court—confusion will persist, and RWAs must tread carefully.