Effect of GST on Maintenance Fees and service fees for apartments and high rise buildings

The service fee or maintenance fees charged on residents living in apartments comes under the definition of taxable services under the GST act 2014.

Attempts are being made to get the Customs Department to exempt the service fees from GST.  If no exemption is given,  it will result in a higher fees or service charges, of at least 6% more.



The Board of Valuers, Appraisers and Estate Agents (Bovaea) are of the view that the fee collected by the Joint Management Body (JMB) or Management Corporation (MC) is for managing the property and not for profit and therefore should not be subjected to GST.

Will the Customs Department give their opinion in time before April 1, 2015?

Actually the bigger issue is, should the maintenance fees be exempted from GST, or classified as Zero rated supply.

If it's classified as exempt supply, then the JMB cannot claim the Input Tax of 6% charged by their suppliers.  The JMB will be forced to increase their service fee collection to cover the higher costs incurred in maintaining their property.   If they are exempted, they do not need to register for GST

If service fees is classified as zero rated supply, then the JMB will be able to claim the input tax charged by their supplier.  But they will be burdened with compliance costs as the GST returns will need to be made every quarter.     
 
Extracted form a report in the Star : No GST  on maintenance fees or service fees if  Customs Department gives the nod