Security and housekeeping are among the largest line items in a housing society’s budget. The GST analysis has two layers: the contractor’s supply to the society, and the society’s recovery from members. The contractor’s supply is taxable where the contractor is registered. The society’s recovery is analysed under the maintenance framework. The two layers should be documented separately, because the invoice from the agency and the invoice or receipt from the society serve different GST purposes.
The Contractor’s Supply to the Society
A security agency or housekeeping agency supplying manpower and services to a society is making a taxable supply. The agency charges GST at the applicable rate where it is registered. The society, if registered, can ordinarily claim input tax credit on the agency’s invoice where the invoice is in the society’s name and the service is used for the society’s business of maintaining common areas.
The agency invoice should describe the service as security services or housekeeping services, with the SAC and the society’s GSTIN. A generic “manpower supply” description can create ambiguity if the credit is reviewed, because the nature of the service and the applicable classification should be apparent from the document.
The Society’s Recovery From Members
Where the society recovers security and housekeeping costs from members as part of the monthly maintenance contribution, the recovery is part of the maintenance framework. The ₹7,500 per-member monthly exemption under Entry 77 of Notification No. 12/2017 applies to contributions for sourcing goods or services from a third person for common use. Security and housekeeping are common-use services, and the recovery can fall within the maintenance framework where it is structured as part of the maintenance contribution.
Where the society separately charges a security or housekeeping charge, the characterisation depends on whether it is a contribution for common-use sourcing or a separate service. The safer approach is to align the invoice description with the substance: if the charge is part of the monthly maintenance contribution, it should be described as maintenance; if it is a separate charge, it should be described accordingly.
The ₹7,500 and ₹20 Lakh Thresholds
The society’s aggregate turnover includes taxable supplies, exempt supplies and zero-rated supplies. Maintenance contributions, security-specific charges, housekeeping-specific charges, interest on delayed payments and other income are aggregated. A society with maintenance charges below ₹7,500 per member per month may still cross the ₹20 lakh threshold because of other income.
Where maintenance charges exceed ₹7,500 per member per month and the society is registered, the CBIC Circular No. 109/28/2019-GST states that GST applies to the entire maintenance amount, not merely the excess. This position is contested, and the society should obtain advice on its facts. The security and housekeeping recovery, where it is part of the maintenance contribution, is analysed within this framework.
What the Society Should Control
The society’s GST position on security and housekeeping depends on three variables: whether the agency’s invoice is in the society’s name and supports credit; whether the recovery from members is structured as part of the maintenance contribution or as a separate charge; and whether the society’s aggregate turnover crosses the registration threshold. The society that controls these variables avoids both losing credit on agency invoices and mischaracterising the recovery from members.
Call to Action: We advise housing societies and RWAs on security and housekeeping contracts, ITC on agency invoices, maintenance-charge structuring and registration thresholds. For a society-specific GST review, contact office@anujdesaiassociates.com, Ph No. 9619456656, Website https://anujdesaiassociates.com, LinkedIn linkedin.com/in/ca-anuj-desai-122547230.