GST on Apartment Maintenance and Corpus Funds: Karnataka Advance Ruling
The Karnataka Authority for Advance Ruling clarified that the Rs. 7,500 GST exemption applies monthly and does not cover corpus fund contributions.
- Ruling
- Order No. KAR. ADRG 13/2026 dated 11.02.2026
- Dated
- 11 Feb 2026
- Authority
- Authority for Advance Ruling
This page was written by Patron Accounting’s AI from the official release and reviewed before publishing. It explains the document in plain language. It is not the document itself. Where this page and the original differ, the original governs.
The short version
- The Rs. 7,500 exemption is calculated monthly, not annually.
- Water supply by an association is part of taxable maintenance services.
- Corpus and sinking fund contributions are taxable as advances upon receipt.
- Voluntary festival donations are not subject to GST.
In short
An apartment owners' association asked the Karnataka Authority for Advance Ruling (AAR) how to apply GST to various collections, including monthly maintenance, water charges, and long-term savings funds. The core issue was whether these different payments qualify for the Rs. 7,500 monthly exemption provided under GST law.
What has changed
How it worked before
Many associations were uncertain whether they could average out maintenance charges over a year to stay under the exemption limit or if one-time corpus fund payments were exempt from tax.
What has changed
The authority ruled that the Rs. 7,500 limit is a strict monthly cap that cannot be averaged annually. It also clarified that corpus funds are taxable advances when collected, and water supply is not a separate exempt good but part of the overall taxable maintenance service.
Who this affects
Apartment owners' associations and housing societies registered under GST.
An example
A housing society collects Rs. 5,000 for monthly maintenance and a one-time Rs. 20,000 contribution for a new elevator fund. Under this ruling, the Rs. 5,000 is exempt because it is under the monthly limit. However, the Rs. 20,000 corpus contribution is taxable as an advance, as it does not qualify for the monthly maintenance exemption.
What you should do
Review your association's billing structure against this ruling. Remember that an Advance Ruling only binds the specific association that asked the question and its local tax office; it is not a universal law for all societies.
If you do nothing
If your association assumes this ruling applies to you and stops collecting GST on corpus funds, you may face tax demands, interest, and penalties if your local officer disagrees. Tax authorities prioritize the specific facts of your society's registration and service agreements over general interpretations.
The terms explained
- Composite supply
- A package of services or goods provided together that are naturally bundled. In this case, water supply is considered part of the main maintenance service rather than a separate item.
- Corpus fund
- A pool of money collected from members for future major repairs or long-term capital expenses.
- Advance
- Money received by a business before the actual service is provided. Under GST, tax is often due as soon as this money is received.
The ruling in detail
Authority for Advance Ruling
M/s Godrej United Owner’s Association
Order No. KAR. ADRG 13/2026 dated 11.02.2026 · Karnataka
Questions before the authority
- Whether the availability of exemption up to an amount of Rs.7,500/- per member per month for sourcing of goods or services for common use of its members under entry No.77 of notification 12/2017 Central Tax (Rate) dated 28-06-2017 (as amended) is to be ascertained on per annum basis i.e. 90,000/- (7500*12) per financial year per member or on the basis of invoicing period i.e. Monthly/Quarterly Invoicing?
- Whether contribution collected from members for supply of water procured through water tanker or BWSSB are covered under entry 99 of Notification.2/2017 Central Tax (Rate) dated 28-06-2017 i.e. under HSN Code 2201 and therefore exempt?
- Whether the applicant is liable to pay GST on amounts which it collects from its members for setting up a corpus fund/sinking fund which is in form of deposit?
- Whether the application of deposit towards consideration at the time of actual supply of service (Capital asset purchase) can be proportion to the depreciation charged in books of accounts in relation to a capital asset?
- Whether the exemption up to an amount of Rs.7,500/- per member per month for sourcing of goods or services for common used of its members under entry No.77 of notification 12/2017 Central Tax (Rate) dated:28-06-2017 (as amended) is available at the time of actual supply of service i.e. when deposit is applied towards consideration? If exemption is available then whether sinking/repair fund contribution from members is to be clubbed with common area maintenance collection for determination of availability of exemption?
- Whether the exemption up to an amount of Rs.7,500/- per member per month for sourcing of goods or services for common used of its members under entry No.77 of notification 12/2017 Central Tax (Rate) dated:28-06-2017 (as amended) is available for sinking/repair fund collected by the applicant from its members being in nature of advance? If exemption is available then whether sinking/repair fund contribution from members is to be clubbed with common area maintenance collection for determination of availability of exemption?
- Whether voluntary contribution received from members for celebration of cultural festivals such as Ganesh Chaturthi, Durga Pooja, etc., is liable to GST?
Facts
The applicant is a registered apartment owners association that collects monthly maintenance charges from members for common area upkeep and services. It also collects separate contributions for a corpus/sinking fund for future contingencies and voluntary donations for cultural festivals. The applicant sought clarity on the taxability of these various receipts and the applicability of the Rs. 7,500 monthly exemption threshold.
Ruling
| Question | What the authority ruled |
|---|---|
| Exemption calculation basis | Applicable on a monthly basis Cannot be aggregated annually or with reference to other invoicing periods |
| Water supply taxability | Not exempt Constitutes part of a composite supply of maintenance services |
| Corpus/sinking fund taxability | Liable to GST Treated as advance receipts at the time of receipt |
| Depreciation accounting | No relevance GST levy is governed by the Act, not accounting practices |
| Clubbing of funds for exemption | Not required to be clubbed Sinking/corpus funds are distinct from monthly maintenance charges |
| Voluntary festival contributions | Not liable to GST Does not qualify as supply due to lack of quid pro quo |
The Authority ruled that the Rs. 7,500 exemption is calculated on a monthly basis and cannot be aggregated annually. It held that water supply is part of a composite supply of maintenance services and is not exempt as an independent supply of goods. Furthermore, corpus/sinking fund contributions are taxable as advances at the time of receipt, and voluntary donations for festivals are not liable to GST as they lack the element of supply.
Reasoning
The Authority determined that the applicant provides a composite supply of maintenance services under SAC 9995, making water supply an ancillary component rather than an independent supply of goods. It relied on Section 13 of the CGST Act to conclude that GST on advances is triggered at the time of receipt. It further clarified that the Rs. 7,500 exemption under Entry 77 of Notification 12/2017 is restricted to recurring monthly maintenance charges and does not extend to one-time corpus fund contributions. Finally, it held that voluntary donations lack the essential elements of supply and consideration under Section 7 and Section 2(31) of the CGST Act.
Provisions relied on
- Section 2(31) of the CGST Act, 2017
- Section 7 of the CGST Act, 2017
- Section 9 of the CGST Act, 2017
- Section 13 of the CGST Act, 2017
- Entry No. 77 of Notification No. 12/2017-Central Tax (Rate)
- Entry No. 99 of Notification No. 2/2017-Central Tax (Rate)
- Circular No. 109/28/2019-GST
For the practitioner
This ruling clarifies that RWA corpus funds are **taxable as advances** upon receipt and cannot be shielded by the Rs. 7,500 monthly exemption. It confirms that water supply provided by an RWA is a **composite supply** and not an exempt supply of goods. Practitioners should note that accounting treatments like depreciation do not override the statutory time of supply provisions.
Source
This is a summary prepared from the published order, which is a scanned document. It is a reading aid and not the authority: where the two differ, the order governs. Verify every provision against the original before relying on it.
Original order: https://www.gstcouncil.gov.in/sites/default/files/AAR/7-aar-godrej_united_owners.pdf
Legibility of the scan, as read: high.
Prepared 12-10-2026.
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