Legal query regarding applicability of GST

I am having a commercial office premises (On Ownership basis) in a fully commercial building in Andheri, Mumbai. I pay for the Maintenance and the Property Tax to the Builder every 6 months when they raise the Bill. This time in the Bill they have applied 18% GST on the Property Tax component as well. When asked, they say that there is no Society formed for the Building and since BMC issues one common Bill for the entire Building's Property Tax, they have to charge GST even on the Property Tax component in the Bill. Please clarify if they can charge me GST on the Property Tax which in itself is already a Tax. Thanks.

Answers (2)

50 votes

TRU under FAQS issued from file no.332/04/2017 -TRU (Sr. no.1) clarified that services provided by the Central government, ----or local authority to a person other than business entity, is exempted from GST. So if property tax collected by the RWA /Cooperated Society on behalf of the MCGM from individual flat owner, then, GST is not liable. In view of this clarification the builder must be asking you to pay GST.
2.In my opinion this does not appear to be a correct interpretation by the builder for the following reasons :
I.Property Tax is not subsumed in the GST, therefore, it can not be considered as a supply of service under section 7 of the CGST ACT 2017. Not being the supply of service GST should not be liable on the Property Tax, and
II.TRU vide its circular no.192 /02/2016-ST dated 13.4.2016 (Sr no.3)clarified that taxes, cess or duties levied are not CONSIDERATION for any particular service as such and hence not liable to Service Tax. These taxes, cess or duties includes --Property Tax.
4.There is merit in your case but you have to contest the issue. This may benefit not only you but others as well.

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56 votes

As you have already rightly pointed out that property tax is also a tax and therefore in GST also there is no GST on any property tax.
therefore, nobody can charge GST on the element of property tax value

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