RERA, GST likely to make co-operative society sites costlier

BENGALURU: Buying a site in a co-operative housing societymay soon become more transparent and more expensive. This is because housing societies now need to register under the Karnataka Real Estate Regulatory Authority and Goods and Services Tax (GST).
“The dream run of cooperative housing societies, which made hay during the property boom in Bengaluru and other major cities of Karnataka, has come to an end. The introductions of RERA and GST has proved to be a double whammy for the developers and a blessing in disguise for homebuyers,” said K Chandrakanth, a member of the Karnataka Homebuyers’ Association.

10,000 co-operative societies have to be registered

Though the societies had approached Karnataka and Bombay high courts (which deals with RERA) seeking relief from RERA, they have failed to get a breather. The court dismissed a batch of petitions which claimed that RERA had encroached upon the rights of CHSs under the Karnataka Cooperative Societies Act 1959. “All cooperative housing societies have to mandatorily register under RERA if the development worksisincomplete. They can register now with penalty in case of default of any provision of the rules,” said Kapil Mohan, principal secretary in the housing department.

As of now, only one society had been registered under RERA. A senior official of the housing department said there are roughly 50,000 cooperative housing societies in Karnataka and a majority of these are in Bengaluru (urban and rural) and Mysuru. Of these, at least 10,000 cooperative societies, which are in the process of developing layouts, have tobe registeredunder RERA.

Also, all CHSs have been brought under GST and they need to register under the newtaxation regime as their turnover collections are likely to exceed the limit of Rs 20 lakh. A senior cooperative official said any transfer fee paid to the society by the new owner on exchange of ownership of flat will be taxable under GST at 18%,” the official added.

Once a society is registered under GST, it has to meet various filing obligations. It also has to comply with the provisions of the reverse charge mechanism, under which if it makes payments to unregistered service providers such as cleaners, electricians and plumbers, it will have to bear the GST of 18% on such payments. It will also have to file relevant forms on the GSTN portal.

However, there will be no imposition of GST on maintenance charges collectedfrom flat owners (members of the CHS) unless the annual collection of the society is Rs 20 lakh or more or the monthly maintenance charge is more than Rs 5,000 per member.

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