Question 1

Our accounting software still asks for sections 194C and 194J for TDS. What changed from 1 April 2026?

Accepted Answer

The Income-tax Act 2025 replaced the 1961 Act from 1 April 2026. All non-salary TDS now sits in one section, s.393, and each kind of payment has a payment code. Challans and returns carry the codes; the old section numbers are no longer accepted. Mapping for the payments a housing society usually makes (in-tax.yaml, FY 2026-27): (1) contractors, old 194C: code 1023 for an individual or HUF at 1 %, code 1024 for others at 2 %; threshold Rs 30,000 for one payment or Rs 1,00,000 in the year; (2) professional fees, old 194J: code 1027 at 10 %; technical services code 1026 at 2 %; threshold Rs 50,000 a year; (3) rent, old 194I: land or building code 1009 at 10 %, plant or machinery code 1008 at 2 %; threshold Rs 6,00,000 a year; (4) commission, old 194H: code 1006 at 2 %, threshold Rs 20,000. A payee without a PAN suffers deduction at 20 %. What stays the same: deposit by the 7th of the following month; quarterly Form 26Q (due 31 Jul, 31 Oct, 31 Jan, 31 May); certificates to payees. Update vendor masters with the new codes, keep a mapping table in the software, and have the society's chartered accountant confirm the codes and rates at the start of each year.

Question 2

Is the lift or generator annual maintenance contract a contractor payment or a technical-services payment for TDS?

Accepted Answer

Usually a contractor payment. A contract for routine servicing and repair of equipment is "work" carried out under a contract, so the contractor code applies (1 % or 2 %). If the agreement is really for specialised technical or consultancy services, the technical-services code may apply. Read the contract and ask the society's CA. Under the 1961 Act, annual maintenance contracts for lifts, pumps and generators were generally treated as contract work (old s.194C) rather than fees for technical services (old s.194J), because the contractor supplies labour and routine servicing rather than expert advice. The 2025 Act keeps both in s.393(1), Table Sl. No. 6. Item 6(i) covers any sum for carrying out any work, including supply of labour, under a contract with a "designated person", which includes any co-operative society (s.402(11)(e)): 1 % for an individual or HUF contractor, 2 % for others, above Rs 30,000 for a single sum or Rs 1,00,000 in the year. Item 6(iii) covers fees for technical services at 2 % above Rs 50,000; such fees mean consideration for managerial, technical or consultancy services (s.9(7)(b)). The payment codes used in the TDS return are contractors 1023/1024 and technical services 1026 (in-tax.yaml). Points to check: (1) whether the bill separates labour and spare parts; a pure purchase of parts on a separate bill is a purchase of goods, not a contract; (2) the thresholds above; (3) whether the contractor is an individual (1 %) or a company or firm (2 %); (4) any lower-deduction certificate the contractor produces (s.395(1)). Record the chosen code in the vendor master so that every bill of the year is treated alike.

Question 3

Do we deduct TDS when the society pays the municipal property tax, the electricity bill or the water bill?

Accepted Answer

No. Property tax and water charges are statutory dues paid to the local authority, and the electricity bill is payment for a supply of power, not for work, professional services or rent. TDS applies to the kinds of payment listed under s.393, such as contracts, professional fees, rent and commission. TDS is deducted only on payments of the kinds the Act lists (in-tax.yaml: contractors, professional and technical fees, rent, commission, interest). A tax or charge levied by a municipal corporation or council under its Act is not consideration for a contract. A distribution company's bill for electricity is a sale of power at tariff. Practical points: (1) Keep these bills in their own expense heads so the TDS routine skips them. (2) If the society pays a private contractor for water tanker supply, pipeline work or electrical repairs, that is a contract payment and the contractor thresholds apply. (3) If the society pays a private company for sewage treatment plant operation, it is usually a contract. (4) Bank charges and GST are not subject to TDS in the society's hands. When in doubt about a particular payee, ask the society's chartered accountant.

Question 4

A contractor's bill shows the work value and GST separately. Is TDS deducted on the total or only on the value before GST?

Accepted Answer

Under the long-standing CBDT position, TDS is deducted on the amount excluding GST when the bill shows GST separately. Deduct on the taxable value, pay the contractor the balance, and keep the GST invoice. CBDT Circular 23/2017 (19 Jul 2017) clarified under the 1961 Act that where GST is indicated separately in the agreement or invoice, tax is to be deducted on the amount without the GST component. The Income-tax Act 2025 continues TDS on the same kinds of payment under s.393. Example (synthetic): a housekeeping agency, a company, bills Rs 50,000 plus GST of Rs 9,000. TDS under code 1024 at 2 % is Rs 1,000 on Rs 50,000. The society pays Rs 58,000 and deposits Rs 1,000 by the 7th of the next month. Watch-outs: (1) if the bill does not show GST separately, deduction is on the whole amount; (2) the annual threshold is tested on the contract value, so keep a vendor-wise running total; (3) if the society is registered for GST and the service is under reverse charge (for example, security from a non-company supplier), the society pays that GST itself; it is not part of the contractor's bill.

Question 5

Our plumber has no PAN, and our security agency has a certificate for lower deduction. How much TDS do we deduct?

Accepted Answer

If the payee does not give a valid PAN, deduct at the highest of the normal rate, the rates in force, or 20 % (s.397(2)(b)(i) of the Income-tax Act 2025). If the payee produces a lower- or nil-deduction certificate issued by the Assessing Officer, deduct at the certified rate while the certificate is valid (s.395(1)). Income-tax Act 2025 s.397(2): every payee must give the deductor a valid PAN; if he does not, tax is deducted at the higher of the rate in the relevant provision, the rates in force, or 20 % (5 % only for purchase of goods and e-commerce sales, Table Sl. No. 8(ii) and 8(v)). A payee without a PAN also cannot obtain a lower-deduction certificate (s.397(2)(f)(ii)). A PAN is made inoperative if its holder fails to intimate Aadhaar (s.262(6)(b)); under the 1961 Act an inoperative PAN was treated like no PAN, and the equivalent rule under the new Act and its rules should be checked. A lower-deduction certificate is issued by the Assessing Officer to the payee on his application; the society then deducts at the certified rate, or not at all, till the certificate's validity (s.395(1)); the Officer can cancel it (s.395(5)). Verify it on the TRACES portal before relying on it, and quote it in Form 26Q. Practical routine: (1) collect the PAN when the work order is issued; do not release payment above the threshold without it; (2) for small jobs below Rs 30,000 per bill and Rs 1,00,000 in the year, no TDS is due at all for contract work (s.393(1) Table Sl. No. 6(i)); (3) keep a copy of the certificate with the vendor file and track the cumulative amount against its limit; (4) once the certificate's limit or period is used up, deduct at the normal rate.

Question 6

We pay the security agency Rs 25,000 a month. From which month must TDS be deducted?

Accepted Answer

No single bill crosses Rs 30,000, but the year's total crosses Rs 1,00,000 with the fourth bill. From that bill the society must deduct, and the deduction should cover the whole amount paid in the year so far, not just the excess. The rate is 2 % for a company or firm, 1 % for an individual proprietor. For contracts, TDS applies when a single payment exceeds Rs 30,000 or payments in the year exceed Rs 1,00,000 (in-tax.yaml, codes 1023/1024). Under the 1961 Act, once the aggregate limit was crossed, tax was deductible on the entire aggregate, including earlier payments made without deduction. Worked example (synthetic, agency is a private limited company, 2 %): April to June: Rs 75,000 paid, no deduction yet. July bill Rs 25,000 takes the total to Rs 1,00,000; not yet above the limit. August bill Rs 25,000 takes it to Rs 1,25,000; deduct 2 % of Rs 1,25,000 = Rs 2,500 from the August payment. September onwards: 2 % of each bill (Rs 500). If it is clear in April that the contract will run all year, many societies deduct from the first bill; that is safe. Deposit by the 7th of the next month and report in Form 26Q. A security agency may also bring GST reverse-charge issues if the society is registered and the agency is not a company (see tax_gst-319).

Question 7

What happens if the society deducts TDS late, deposits it late, or files Form 26Q late?

Accepted Answer

The society pays interest for each month of delay, a daily late fee for a late return, and may face a penalty. The officers who run the society's finances answer for it. Since most of a housing society's income is exempt, disallowance of the expense matters less than the interest and fees, which are a real cost to members. Income-tax Act 2025: (1) a society that fails to deduct, or deducts and fails to pay, is an "assessee in default" for that tax (s.398(1)); (2) simple interest at 1 % a month or part of a month from the date tax was deductible to the date deducted, and 1.5 % a month from deduction to payment, to be paid before the TDS statement is filed (s.398(3)); (3) a fee of Rs 200 a day for a late TDS statement, capped at the tax deductible, paid before filing (s.427); (4) a penalty of Rs 10,000 to Rs 1,00,000 for a late or incorrect statement, not levied for delay if the tax, fee and interest were paid and the statement was filed within one month of the due time (s.461); (5) in computing business income, 30 % of a payment on which tax was not deducted or paid is disallowed (s.35(b)(i)). These carry forward the 1961 Act's s.201(1A), 234E, 271H and 40(a)(ia). For a housing society: (a) interest and fees are paid from society funds, which means from members; the committee should treat them as avoidable losses and explain them to the general body; (b) the payee cannot get credit until the deposit and return are made, which spoils relations with vendors; (c) a default notice goes to the society's TAN; keep the TRACES login with the treasurer and one other office-bearer. Prevent it with a monthly checklist: payments above threshold listed, tax deposited by the 7th, 26Q filed by 31 Jul, 31 Oct, 31 Jan and 31 May, certificates issued.

Question 8

Does the society need its own TAN and PAN, and who signs the TDS returns and the income-tax return?

Accepted Answer

Yes. A society that deducts TDS must have a TAN, and it needs a PAN to file its own return and receive TDS credit. Returns are signed and verified for the society by its principal officer, usually the chairman or secretary as the committee authorises. TAN: every person required to deduct tax must obtain a tax deduction account number and quote it on challans, TDS returns and certificates (research/01 §12 notes that TAN is mandatory). PAN: the society's own identity for its income-tax return (ITR-5), for banks deducting TDS on its fixed-deposit interest, and for tenants such as a telecom company deducting TDS on rent. Who signs: the committee should pass a resolution naming the office-bearer who will act as the principal officer for tax filings and who holds the digital signature or e-verification access. Record it in the minutes and update the income-tax and TRACES profiles when office- bearers change after an election, just as bank signatories are changed. Keep the TAN and PAN letters, login credentials (with two office-bearers) and all challans in the taxation file; the draft 2026 bye-laws require taxation records and filings to be kept for ten years (dBL 138).

Question 9

What goes into the society's ITR-5, and which income is actually taxed?

Accepted Answer

ITR-5 reports all receipts but taxes only non-mutual income: interest from banks that are not co-operative banks, rent from towers and hoardings, and fees from non-members. Member contributions are shown as exempt on mutuality. The co-operative deduction under s.149 then reduces what is left. How the computation usually runs: (1) Member contributions for common purposes (maintenance, funds, non-occupancy and transfer charges) are not income on the principle of mutuality (Venkatesh Premises, SC, 12 Mar 2018, para 19). They are disclosed but not taxed. (2) Taxable heads: interest from nationalised or private banks; rent or fees from non-members such as telecom towers, hoardings and hall hire to outsiders; other non-member income (in-tax.yaml `taxable_income_accounts`). (3) Expenses wholly for earning that income may be deducted from it; common expenses cannot all be charged against it. (4) s.149 (old 80P): interest and dividend from co-operative banks and societies deducted in full; up to Rs 50,000 of other profits deducted (s.149(2)(c)(ii)). (5) TDS already deducted by banks and tenants is claimed as credit; match it with the annual information statement before filing. The return is due by 31 Oct because the accounts are audited under the MCS Act. Keep non- member income in separate ledger heads all year to make this simple.

Question 10

If the society files its income-tax return late, does it lose the co-operative deduction?

Accepted Answer

Yes. Under the Income-tax Act 2025 the co-operative deduction (s.149, old 80P) is not allowed if the return is not filed by the due date under s.263(1), or if the deduction is not claimed in that return (s.122(5)). A late return can turn fully deductible co-operative bank interest into taxable income. Treat 31 October as a hard deadline. Section 122(5) of the Income-tax Act 2025 says that no deduction under Part C of Chapter VIII, which includes the co-operative deduction in s.149, is allowed to an assessee who fails to furnish the return on or before the due date under s.263(1), or fails to claim the deduction in that return. This carries forward old s.80AC of the 1961 Act. A housing society that files late therefore pays tax on co-operative bank interest (s.149(2)(d)) and on the first Rs 50,000 of other income (s.149(2)(c)(ii)) that would otherwise have been deductible, plus interest and a late fee (s.428). The return of income is under s.263 of the new Act. Calendar that avoids the problem: (1) finish the statutory audit early (the draft 2026 bye-laws aim for 31 July); (2) reconcile TDS credits with the annual information statement in September; (3) file ITR-5 by 31 October; (4) keep the acknowledgement with the AGM papers. Even a society with no taxable income after deductions should file, because the deduction is available only if claimed in a return filed in time.

Question 11

At what rate is a housing society's taxable income taxed, and should it opt for the concessional co-operative regime?

Accepted Answer

A co-operative society is taxed at the slab rates fixed each year by the Finance Act (traditionally 10 %, 20 % and 30 %), plus cess and any surcharge. The 2025 Act also offers a flat 22 % option (s.203), but only without the Chapter VIII deductions, including the co-operative deduction in s.149, which usually makes it worse for a housing society. Slab rates: under the 1961 Act and the Finance Acts a co-operative society paid 10 % on the first Rs 10,000 of taxable income, 20 % on the next Rs 10,000 and 30 % above that, plus health and education cess and surcharge above high income levels; under the 2025 Act the rates for each year still come from the annual Finance Act ("rates in force"). Concessional option: s.203 of the Income-tax Act 2025 (old s.115BAD) lets a resident co-operative society opt for 22 % on its total income, computed without any deduction under Chapter VIII except s.146, so the co-operative deduction in s.149 is lost; the option must be exercised by the due date under s.263(1) and, once exercised, applies to later years and cannot be withdrawn (s.203(5)-(6)). For a housing society the taxable part is usually small (non-co-operative bank interest and non-member rent), and the co-operative deduction removes co-operative bank interest and up to Rs 50,000 of other profits. Giving that up for a flat rate rarely helps, and the choice is irreversible. The treasurer should ask the society's CA each year which rate applies and record the choice. Tax payable after TDS credit is paid as self-assessment tax before filing; if the liability is large, advance tax instalments may be due during the year.

Question 12

Is the interest the society charges members on late maintenance taxable income of the society?

Accepted Answer

Probably not. The interest comes from members, under the bye-laws, and goes into the common pool for members' benefit, so the mutuality principle that covers maintenance should cover it too. The point has not been settled by the Supreme Court; take advice if the amounts are large. The Supreme Court in Venkatesh Premises (12 Mar 2018, para 19) treated non-occupancy charges, transfer charges and common-amenity contributions received from members as mutual receipts: they come from members and are used only for the members' common benefit. Interest on late payment of those same charges is levied on members, under the society's bye-laws and Rule 106C-12(4) item 6, and has the same contributors and participants. Contrast interest the society earns from outsiders, such as a bank: that is taxable unless a deduction applies (Bangalore Club; see tax_gst-005). Practical points: (1) Keep interest from members in a separate income head so its treatment can be explained. (2) The interest rate is capped at 12 % simple a year under the 2026 Rules, at the rate the general body fixes. (3) For GST, interest on late payment is treated differently; see tax_gst-322.

Question 13

Our clubhouse and hall are used by members and also let to outsiders. How are the charges treated for income tax and GST?

Accepted Answer

Charges paid by members for using common amenities are covered by mutuality for income tax. Hire charges from outsiders are ordinary taxable income and a taxable supply for GST, and they count towards the Rs 20 lakh registration threshold. Keep the two in separate ledger heads. Income tax: Venkatesh Premises (para 19) treats contributions from members for common amenities as mutual. A fee from an outsider for a wedding or a class in the hall is a commercial receipt, taxable after related expenses, and eligible only for the general co-operative deduction up to Rs 50,000 (s.149(2)(c)(ii); in-tax.yaml). GST: the exemption in entry 77(c) covers a welfare association's supply to its own members by way of reimbursement or share of contribution for common use, up to Rs 7,500 per member per month. Hall hire to an outsider is outside it and taxable at 18 % if the society is registered. Whether an individual member's booking fee for exclusive use of the hall is within entry 77(c) is less clear, because it is a charge for a private use, not a share of common costs. Bye-laws: under the 2014 bye-laws the society may not let common spaces for any purpose without the general body's approval (BL 168-169); the general body should approve the hire policy and rates.

Question 14

When a flat is sold, is the transfer fee or transfer premium the society collects taxable?

Accepted Answer

For income tax, no: the Supreme Court held transfer charges collected from members are mutual receipts. For GST the position is not settled; a registered society should take advice before deciding not to charge GST. The amount itself is capped by the 2001 Government direction. Income tax: Venkatesh Premises (SC, 12 Mar 2018, para 19): transfer charges are payable by the outgoing member; even if part is paid by the incoming purchaser it is appropriated only after he becomes a member, so it has no element of profit or commerciality. GST: entry 77(c) exempts a welfare association's supply to members by way of share of contribution for common use, up to Rs 7,500 per member per month. A one-time transfer premium is not a monthly contribution and is charged for admitting a new member, so it may be seen as a separate supply. There is no CBIC clarification specific to it that we have confirmed. For a society below the Rs 20 lakh threshold the question does not arise. Limits under the MCS regime: the transfer premium is capped at Rs 25,000 in municipal corporation areas, Rs 10,000 in municipal councils and Rs 5,000 elsewhere, with a transfer fee of Rs 500 (s.79A direction of 9 Aug 2001), and is not payable on transfer to family, a nominee or an heir. Both are credited to the Reserve Fund (Rule 106C-11(1)(b)).

Question 15

I have let out my flat and pay non-occupancy charges. Does the society pay income tax or charge GST on them?

Accepted Answer

No income tax: the Supreme Court held non-occupancy charges from members are mutual receipts. For GST they are part of what the member pays the society each month, so they count towards the Rs 7,500 test; if the total is above Rs 7,500 and the society is registered, GST at 18 % applies. Income tax: Venkatesh Premises (para 19): non-occupancy charges are paid by a member who lets out the premises and are used only for the common benefit of members; they are not income. GST: research/01 §12 and tax_gst-003 treat non-occupancy charges as consideration for the society's services, counted with the rest of the monthly bill for the Rs 7,500 test. Example (synthetic): service charges Rs 3,000, funds Rs 2,500, parking Rs 500 and non- occupancy Rs 300 = Rs 6,300; under Rs 7,500, so no GST. If the bill were Rs 8,000, the whole of it would be taxable under the CBIC view (tax_gst-002), including the non-occupancy part. The charge itself: under the 2026 Rules non-occupancy charges are 10 % of service charges (Rule 106C-12(4) item 8), and nothing is due when the flat is occupied by the member's family. The tenant does not pay the society; the member does.

Question 16

We let spare parking slots to outsiders and charge members for parking. How are these receipts taxed?

Accepted Answer

Members' parking charges are part of their contribution: mutual for income tax, and counted in the Rs 7,500 test for GST. Parking let to outsiders is commercial: taxable income, and a taxable supply for GST that counts towards the Rs 20 lakh threshold. Letting to outsiders also needs the general body's approval. Members: parking charges are a head of the society's charges fixed by the general body (Rule 106C-12(1)(e), (4) item 5) and payable whether or not the slot is used (BL 82). For income tax they are contributions for a common amenity (Venkatesh Premises, para 19). For GST they are added to the rest of the monthly bill for the Rs 7,500 test (tax_gst-003). Outsiders: rent from a non-member, such as a shop's customer or a neighbouring building's resident, is outside mutuality and outside entry 77(c). It is taxable income (eligible for the Rs 50,000 general co-operative deduction at most) and, if the society is registered, GST at 18 % applies. Bye-laws: parking is primarily for members; the 2014 bye-laws give extra slots only year to year while no slot-less member wants one (BL 79), and common spaces may not be let without the general body's approval (BL 168). The draft 2026 bye-laws require a GB-approved parking policy (dBL 76).

Question 17

The general body has asked every member for a one-time corpus contribution. Is it taxable, and does it count in the monthly Rs 7,500 GST test?

Accepted Answer

For income tax, a contribution by members to their own common fund is covered by mutuality. For GST the answer is unsettled: some advisers spread a one-time levy over the period it covers, others treat it as a separate receipt. A registered society should get written advice before billing. Rule 106C-11(8) lets a society maintain a Corpus Fund, and 106C-11(9) allows other funds for specific purposes with equal contributions from all members, with general-body approval. Income tax: money collected from members for the members' common purposes is not income on mutuality (Venkatesh Premises, para 19). Interest earned by investing the corpus in a non-co-operative bank is taxable (tax_gst-005). GST: entry 77(c) is framed per member per month. A lump sum such as Rs 50,000 in one month would, read literally, exceed Rs 7,500 for that month; if it is for a capital purpose spread over years, some advisers argue it should be tested on a monthly equivalent. There is no CBIC clarification on one-time levies that we have confirmed. To reduce risk: state the purpose and period in the resolution; bill it as a separate fund contribution; keep it in the fund ledger; and let the society's CA decide the GST treatment in writing. Corpus paid by a developer to individual members in redevelopment is a different question for each member's own tax.

Question 18

Our society is registered for GST. On which purchases can it take input tax credit, and why is some credit reversed?

Accepted Answer

Credit is available on GST paid on goods and services used for the society's supplies: housekeeping, security, lift and pump AMCs, routine repairs, consumables. It must be reversed in proportion to exempt supplies (contributions of members at or below Rs 7,500), and it is blocked on works contracts for building or capitalised repairs to immovable property. CBIC Circular 109/28/2019 confirms that a registered welfare association may take ITC on capital goods, goods and input services used for its supplies (research/01 §12). Two limits: (1) Exempt supplies: where inputs are used for both taxable and exempt supplies, credit is taken only for the taxable share, computed each month and trued up at year-end under the CGST Rules (rules 42 and 43). In a society where some members pay above Rs 7,500 and others below, or where there is exempt interest, part of the credit goes. (2) Blocked credits under s.17(5): works contract services and goods or services for construction of immovable property are blocked, except for plant and machinery; "construction" includes repairs to the extent capitalised. Painting and routine repairs charged to expenses are usually eligible; a new lift, structural repair or waterproofing that is capitalised may be blocked. Also: credit only on valid tax invoices in the society's GSTIN that appear in the supplier's returns; pay suppliers within 180 days or reverse the credit.

Question 19

When does a GST-registered society have to pay GST itself under reverse charge?

Accepted Answer

Mainly on security services bought from a supplier that is not a company (for example a proprietor or partnership agency), and on legal services from an advocate or law firm. The society pays that GST in cash and may then take credit, subject to the usual limits. Under the reverse-charge notification (Notification 13/2017-Central Tax (Rate), as amended), the recipient rather than the supplier pays GST on certain services. Those most relevant to a housing society: (1) security services (supply of security personnel) provided by a person other than a body corporate to a registered person: the society pays the GST if it is registered; if the agency is a company, the agency charges GST normally; (2) legal services by an individual advocate or a firm of advocates to a business entity. Practical steps for a registered society: (1) find out each security agency's constitution when contracting; (2) if reverse charge applies, the agency's invoice should not include GST; the society issues a self-invoice and pays the tax in cash through GSTR-3B; (3) credit of that tax is then available only to the extent inputs are used for taxable supplies (tax_gst-318). An unregistered society does not pay reverse-charge GST on security services, since that entry applies to registered recipients.

Question 20

Our society registered for GST, but now every member's bill is below Rs 7,500 and there is no outside income. Can we cancel the registration?

Accepted Answer

Yes, if the society is no longer required to be registered. A society making only exempt supplies need not be registered, so it may apply to cancel. It must file a final return and pay back credit on stock and capital goods held on the date of cancellation. Registration is required above the Rs 20 lakh aggregate turnover threshold (CGST s.22), but a person engaged exclusively in supplying exempt goods or services is not liable to register (s.23(1)(a)). If every member's contribution is within the Rs 7,500 exemption and the society has no taxable non-member income (hoardings, towers, outside hall hire, outside parking), all its supplies are exempt. Steps: (1) confirm with the CA that no supply is taxable, including under reverse charge; (2) apply for cancellation on the GST portal with the reason and date; (3) reverse the input tax credit on inputs in stock and on capital goods (reduced for their age) as the Act requires, and pay any tax due; (4) file the final return (GSTR-10) after cancellation; (5) keep records for the statutory period. Before cancelling, consider whether the position will change soon: a revision of charges above Rs 7,500 or a new tower lease would mean registering again within 30 days of liability.

Question 21

Once registered, which GST returns must the society file and how often?

Accepted Answer

A statement of outward supplies (GSTR-1) and a summary return with tax payment (GSTR-3B), monthly, or quarterly under the QRMP scheme for small taxpayers with monthly tax payments, plus an annual return where it applies. A nil return is still a return. Routine for a registered society: (1) Invoices: issue a tax invoice to each member whose bill is taxable, showing GSTIN, the taxable value and GST; exempt bills can use a bill of supply. (2) GSTR-1: details of outward supplies, monthly or quarterly under the QRMP scheme (for turnover up to Rs 5 crore). (3) GSTR-3B: summary and payment. Under QRMP, tax is paid monthly for the first two months of a quarter and the return is quarterly. (4) Input tax credit is matched with what suppliers have reported; claim only what appears. (5) Annual return: GSTR-9 for the year, subject to the turnover-based relaxations notified each year. (6) Late filing attracts a late fee per day and interest on tax paid late; returns filed late for long periods can lead to cancellation of registration. Keep GST records with the society's tax file; the draft 2026 bye-laws require taxation records and filings to be kept for ten years (dBL 138).

Question 22

My maintenance is below Rs 7,500, but I paid late and was charged interest. Can the society add GST on that interest?

Accepted Answer

Under GST, interest or a late fee for delayed payment is part of the value of the supply it relates to. So it follows the maintenance: if your contribution is exempt, the interest is treated the same way, but if adding it takes the month's charge above Rs 7,500, the treatment is unclear. A society below the Rs 20 lakh threshold charges no GST at all. CGST s.15(2)(d) includes in the value of a supply any interest, late fee or penalty for delayed payment of consideration. The interest therefore takes the character of the underlying supply rather than being a separate supply. For a registered society: (1) member whose monthly contribution, even with interest, stays within Rs 7,500: exempt; (2) member whose contribution already exceeds Rs 7,500: the interest is taxable with it; (3) member just below Rs 7,500 whose interest takes the month over the limit: there is no confirmed clarification; take the CA's advice and apply one policy to everyone. For income tax, interest from members is discussed in tax_gst-312. The interest itself must be simple, at the rate fixed by the general body and not above 12 % a year (Rule 106C-12(4) item 6), and, under the draft 2026 bye-laws, not charged during the payment period, with 12 % applying if the general body has fixed no rate (dBL 66).

Question 23

The telecom company that rents our terrace deducts TDS from its rent. How does the society get credit for it?

Accepted Answer

The tenant deposits the TDS against the society's PAN and files it in its TDS return. The credit then appears in the society's annual tax statement and is claimed in the ITR-5 against the tax on that rent. Check every quarter that the amounts match the rent agreement. Rent paid by a business tenant above the annual threshold is subject to TDS (in-tax.yaml: land or building code 1009 at 10 % above Rs 6,00,000 a year; plant or machinery 1008 at 2 %). Some tenants treat a tower site as plant and machinery; the rate on the certificate shows which view they took. Steps for the treasurer: (1) give the tenant the society's correct PAN and name as on the PAN; (2) collect the quarterly TDS certificate; (3) check the society's annual information statement / Form 26AS on the income-tax portal each quarter; (4) book the rent gross in a separate non-member income head and the TDS as an asset (tax deducted at source receivable); (5) claim the credit in ITR-5; any excess over the tax payable is refunded. If the tenant has quoted a wrong PAN or not filed its return, ask it to correct its statement; the society cannot claim credit that does not appear. Tower rent is also a taxable supply for GST and counts towards the Rs 20 lakh threshold (tax_gst-007, tax_gst-202).

Question 24

Do the 2026 Rules or the draft 2026 bye-laws change the society's GST, income-tax or TDS position?

Accepted Answer

Not directly: GST and income tax are central laws and the MCS Rules cannot change them. But the Rules change what members are billed (carpet-area sharing, 12 % interest cap, non-occupancy at 10 % of service charges, new funds), and that can change whether a member's monthly bill crosses Rs 7,500. The draft bye-laws add record-keeping duties for tax papers. What stays the same: the Rs 20 lakh GST threshold, the Rs 7,500 exemption and the CBIC "entire amount" view; mutuality and the s.149 co-operative deduction; TDS under s.393. What changes indirectly: (1) Apportionment: from 22 Jun 2026, insurance, lease rent and the major repair fund are shared by carpet area (Rule 106C-12(4)), replacing built-up area; property tax on common areas by carpet area. Each member's bill moves, so re-test the Rs 7,500 limit flat by flat. (2) Interest on arrears is capped at 12 % simple (was 21 % under BL 72). (3) New or renamed funds (Rule 106C-11), such as the Education and Training Fund at Rs 10 a member a month, add to the monthly contribution. (4) Audit fees are service charges shared equally (106C-12(2)(h)). Draft 2026 bye-laws (not yet final): taxation records and statutory filings kept ten years (dBL 138); the committee stays responsible for books kept by a software provider (dBL 140(4)). Statutory pass-throughs such as property tax remain outside the Rs 7,500 test.

Question 25

How does the treasurer deduct and deposit TDS, step by step?

Accepted Answer

Get a TAN for the society. At each payment, check the payee type and the threshold, deduct at the rate for that payment code under s.393 of the Income-tax Act 2025, and pay the vendor the net amount. Deposit the tax by the 7th of the following month, file Form 26Q every quarter, and give each payee a TDS certificate. Rates and thresholds (in-tax.yaml, FY 2026-27): - contractors (security, housekeeping, repair contractors): 1 % for an individual or HUF, 2 %
  for others; when a single payment exceeds Rs 30,000 or the year's total exceeds Rs 1,00,000;
- professional fees (auditor, architect, advocate): 10 % above Rs 50,000 a year; - technical services: 2 % above Rs 50,000 a year; - rent of land or building: 10 % above Rs 6,00,000 a year; - payee without a PAN: 20 %. Routine: 1. Collect each vendor's PAN when the work order is issued. 2. Keep a vendor-wise running total so you know when the annual threshold is crossed. 3. Record the deduction in the voucher and the ledger; pay the net amount. 4. Pay the tax online by the 7th of the next month using the society's TAN. 5. File the quarterly return (Form 26Q) by 31 Jul, 31 Oct, 31 Jan and 31 May. 6. Download and issue the certificates. Late deduction or deposit attracts interest, fees and disallowance. The society's chartered accountant should confirm codes and rates each year; see tax_gst-006 for the background.

Question 26

When does a housing society have to register for GST?

Accepted Answer

Registration is required once the society's aggregate turnover in a financial year exceeds Rs 20 lakh (s.22 CGST Act). A society whose entire supplies are exempt, for example because every member's monthly contribution is Rs 7,500 or less, is generally not required to register even above that figure. Take a chartered accountant's view before deciding. The two figures in in-tax.yaml are the Rs 20 lakh registration threshold and the Rs 7,500 per member per month exemption for a residential welfare association's supply to its own members (Notification 12/2017-CT(R), entry 77(c), as amended). How to check each year: 1. Add up the year's receipts from members and non-members: maintenance, parking, hall hire,
   hoardings, mobile tower rent, interest on late payment. Aggregate turnover includes exempt
   supplies.
2. If the total is at or below Rs 20 lakh, registration is not required. 3. If it is above, check whether any supply is taxable: any member paying more than Rs 7,500 a
   month for common services, or income from non-members such as hoardings or towers. If any
   supply is taxable, register within 30 days of becoming liable.
4. Once registered, file monthly or quarterly returns and charge 18 % on taxable supplies. Statutory pass-throughs such as property tax, water charges and electricity are left out of the Rs 7,500 test (CBIC Circular 109/28/2019). See tax_gst-001 to tax_gst-003.

Question 27

Does our society have to charge GST on maintenance?

Accepted Answer

Only if both tests are met. First, the society's annual turnover exceeds Rs 20 lakh. Second, a member's monthly contribution for common services exceeds Rs 7,500. A small society, or one where every member pays Rs 7,500 a month or less, charges no GST on members' contributions. Notification 12/2017-Central Tax (Rate), entry 77(c), as amended by Notification 2/2018 from 25 Jan 2018, exempts a residential welfare association's supply of services to its own members by way of reimbursement of charges or share of contribution. The contribution must be for common use, up to Rs 7,500 per month per member. A society with aggregate turnover up to Rs 20 lakh need not register under s.22 of the CGST Act, and then charges no GST at all. Mutuality is not a defence for GST. Section 7(1)(aa) of the CGST Act, inserted by the Finance Act 2021 with retrospective effect, treats a society and its members as distinct persons. In Emerald Court CHS the Maharashtra AAR relied on this to hold maintenance taxable above the limit. Property tax, water tax, electricity and other statutory pass-throughs collected for the local authority or a utility are left out of the Rs 7,500 test (CBIC Circular 109/28/2019). Registered societies file GSTR-1 and GSTR-3B and may take input tax credit, proportionately where part of the supplies is exempt. Consult a chartered accountant on registration.

Question 28

If a member's maintenance is Rs 9,000 a month, is GST due on Rs 9,000 or only on the Rs 1,500 above Rs 7,500?

Accepted Answer

In Maharashtra, treat the whole Rs 9,000 as taxable. That is the CBIC position, which the department follows. A Madras High Court single judge held in 2021 that only the excess is taxable, but that ruling is stayed on appeal and does not bind Maharashtra. CBIC Circular 109/28/2019-GST (22 Jul 2019) says that if the charges exceed Rs 7,500 per month per member, the entire amount is taxable. The Maharashtra AAR in Emerald Court applied that reading. In Greenwood Owners Association the Madras High Court (Dr Anita Sumanth J., 1 Jul 2021) read entry 77(c) as a threshold exemption. It held that "only contributions to RWA in excess of Rs.7,500/- ... would be taxable" and quashed the circular to that extent (para 26). The department appealed in W.A. 2592 of 2021, and a Division Bench stayed the ruling. The appeal was still pending on 17 Apr 2026, according to a later Madras High Court order. A High Court ruling binds only authorities in its own state. A society here that pays GST on the excess alone risks a demand with interest and penalty. If a society chooses the minority view, it should record that choice in a resolution, get professional advice and disclose the position in its accounts. SocietyAxis defaults to "entire amount" (in-tax.yaml `over_threshold_policy_default`).

Question 29

Which parts of the bill count towards the Rs 7,500 limit, and which heads attract GST at 18 %?

Accepted Answer

Count everything the society charges a member for common services and funds, including the sinking fund, repair fund, parking and non-occupancy charges. Leave out statutory pass-throughs such as property tax, water tax and electricity collected for the authority. When GST applies, the rate is 18 %. The Rs 7,500 test is per member per month on the contribution for common use. Circular 109/28/2019 keeps statutory dues collected and paid over on the member's behalf out of the test. Contributions to the Sinking Fund and the Repairs and Maintenance Fund are part of the consideration for the society's services, so they count and are taxed once the limit is crossed. Parking, non-occupancy charges and interest on late payment are also consideration in this analysis. A member who owns two flats in the same society is tested per flat (per residential unit) under the circular. The treatment of each charge head is kept in the regime file (in-tax.yaml `passthrough_exempt`), not in code.

Question 30

Does a housing society pay income tax on the maintenance it collects from members?

Accepted Answer

No. Under the principle of mutuality, contributions by members for common purposes are not income. That covers maintenance, funds, transfer charges within the legal cap and non-occupancy charges. Income from outsiders is taxable, and so is interest on deposits with ordinary banks. Mutuality applies where the contributors and the participants in the fund are the same persons. In Venkatesh Premises the Supreme Court held that a co-operative society's non-occupancy, transfer and common-amenity charges received from members are exempt on this principle (paras 14-15). That judgment affirmed the Bombay High Court's line of cases. Mutuality does not cover: - rent or fees from non-members, such as mobile towers, hoardings and hall hire to outsiders; - interest from banks other than co-operative banks (see tax_gst-005). The society files ITR-5 by 31 Oct. Under the Income-tax Act 2025, in force from 1 Apr 2026, the return and its due date are under s.263 (old s.139(1)) and the old s.80P deduction is now s.149.

Question 31

Is the interest on the society's fixed deposits taxable?

Accepted Answer

Interest from nationalised and private banks is taxable. Mutuality does not apply to it, as the Supreme Court held in Bangalore Club (2013). Interest from co-operative banks is deductible in full as income from another co-operative society (old s.80P(2)(d), now s.149). In Bangalore Club the club claimed that interest on fixed deposits with banks that were its own corporate members was exempt under mutuality. The Supreme Court rejected the claim on all three conditions of mutuality (paras 26-28). The banks lent the deposits to third parties, so the arrangement lacked identity between contributors and participators. The same reasoning applies to a housing society's deposits with commercial banks. The old s.80P(2)(d) deduction covered interest or dividends from investments with another co-operative society, and a co-operative bank is a co-operative society. The Mumbai bench of the ITAT has consistently allowed this deduction to housing societies. Charkop Lands End CHS (2024), following Kaliandas Udyog Bhavan (2018), is an example. The society is in any case bound by s.70 of the MCS Act to invest in co-operative banks and similar modes. The ₹50,000 general deduction of old s.80P(2)(c)(ii) now sits in s.149(2)(c)(ii).

Question 32

Does the society have to deduct TDS when it pays contractors, the security agency or the auditor?

Accepted Answer

Yes, once the payments cross the thresholds. From 1 Apr 2026 all non-salary TDS falls under s.393 of the Income-tax Act 2025, with payment codes. The society needs a TAN, deposits the tax by the 7th of the next month and files Form 26Q every quarter. The main codes (in-tax.yaml): - Contractors, including security and housekeeping agencies and repair contractors: code 1023
  for an individual or HUF at 1 %, code 1024 for others at 2 %. Thresholds are Rs 30,000 for a
  single payment or Rs 1,00,000 in a year.
- Professional fees, including the auditor, architect and advocate: code 1027 at 10 %, above
  Rs 50,000 a year.
- Technical services: code 1026 at 2 %. - Rent of land or buildings: code 1009 at 10 %, above Rs 6,00,000 a year. - Payee without a PAN: 20 %. The society gives Form 16A to each payee. It may also have to pay GST under reverse charge on some services, such as security from a non-body-corporate or legal services; see research/01 §12. Failing to deduct makes the payment disallowable and attracts interest and penalty. The treasurer should check the thresholds before each payment.

Question 33

Is income from a mobile tower, hoardings or renting the hall to outsiders taxable?

Accepted Answer

Yes. Receipts from non-members are outside mutuality and are taxable income of the society. They may also attract GST if the society is registered or crosses Rs 20 lakh. The general body must approve such use of common property. Mutuality covers only contributions by members (Venkatesh Premises). Rent from a telecom company or an advertiser is commercial income. Under the 2014 bye-laws the committee may allow advertisement boards with the local authority's permission, on terms approved by the general body (BL 169). The bye-laws otherwise forbid letting common spaces for any purpose (BL 168). Show this income separately in the accounts. It counts towards GST turnover, and the tenant may deduct TDS on the rent it pays the society.

Tax & GSTकर व जीएसटी