Victory

GST EXEMPTION–NON-COMMERCIAL/NON-PROFIT ASSOCIATIONS REGISTERED UNDER GOVT LAW/ACT

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Honourable Finance Minister of India

As the central government is reviewing and rectifying abnormalities in Goods & Services Tax rules, through this petition, we are bringing to the attention of the Hon. Finance Minister of India, certain unfair aspects of subjecting members of Associations registered under state Government Law such as the Karnataka Apartment Ownership Act 1972 (Karnataka Act 17 of 1973), to the Goods & Services Tax – GST at 18% tax rate.

BACKGROUND

In Karnataka, several Associations are registered under The Karnataka Apartment Ownership Act 1972. The sole purpose of such Associations, as specified by the Act, is the proper management and maintenance of Common Areas of Apartment Layouts for RESIDENTIAL PURPOSE only. 

+Association formed and registered under Karnataka Apartment Ownership Act 1972.
+Members are subjected to PROPORTIONATE SHARE of all Association expenses.
+Association pays GST for all taxable goods and services.
+Members pay property tax, Solid Waste Management Cess etc.
+Association is 100% non-profit and non-commercial organization.

18% GST on MEMBERS

While several commercial establishments are with zero or at lower tax rates, present tax rules subject members of such Associations to 18% GST on payments made towards proportionate share of common area management and maintenance charges. An exemption is allowed to members with charges up to Rs. 5000 per month. Due to the exemption to selected members, the Association is deprived of 100% input tax credits. Subjecting the Association to GST puts additional financial burden towards professional services for complex accounting and tax compliance.  

The exemption limit is arbitrary and discriminatory, since the principle of financial liability of members is PROPORTIONATE SHARE of all Association expenses by all members. GST is an unfair taxation on the members of non-profit and non-commercial Associations.

The Hon. Finance Minister is humbly requested to review all these aspects and fully exempt members of Associations Registered under The Karnataka Apartment Ownership Act or similar State Government Laws/Acts from GST.

 

 



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