GST applicable on Society Donation by out going member: AAR

By Maharashtra Bureau

Housing Societies seek transfer fee from outgoing member and also incoming member. Although Transfer fee is 2% of agreement or 25000/- which ever is lower, but housing societies and commercial societies ask huge donations from the out going member on pre-text of giving NOC. Although such NOCs are also not mandatory but when incoming member wants to avail loans, such NOCs are required.

GST is applicable on Transfer fee as well as on any donation or additional funds given for transfer. GST applies on Transfer fee @18% if the Society not otherwise exempt  from GST registration.

Recently, Authority for Advance Ruling (AAR), Maharashtra, in the matter of a south Mumbai housing Society had to determine gratuitous payment from an outgoing member, would be subject to GST. Based on the facts of the case, AAR held that the gratuitous payment, which ran into several lakhs, would be subject to GST.