Corpus Fund Collected by Apartment Owners’ Association Is ‘Supply’, GST Payable at Time of Collection; Rs. 7,500 Monthly Exemption Not Applicable: AAR

The Authority for Advance Ruling Karnataka (AAR) has held that corpus fund contributions collected by a residential apartment owners’ association from its members for future capital expenditure qualify as a “supply” under GST law, and therefore GST becomes payable at the time of collection of such funds. The bench of Kalyanam Rajesh Rama Rao and Sivakumar S Itagi has ruled that the ₹7,500 per member per month exemption available to resident welfare associations (RWAs) for maintenance charges cannot be extended to corpus fund collections. The applicant, Apartment Owners Association of Raj Lake View, a resident welfare association registered under the Karnataka Societies Registration Act. The association manages a residential complex and collects monthly maintenance charges from its members to meet routine operational expenses such as salaries of security and housekeeping staff, electricity for common areas, water supply, and other administrative costs. Apart from regular maintenance charges, the association proposed to collect a corpus fund from members to create a financial reserve for future capital expenditures, including building repainting, structural repairs, lift replacement, and other major infrastructural works. The association approached the AAR seeking clarity on whether such corpus fund collections would fall within the scope of “supply” under GST and whether the exemption applicable to maintenance charges could apply to these funds. The applicant sought an advance ruling on the three issues. Firstly, whether collection of corpus funds from members for capital expenditure constitutes a supply under Section 7 of the CGST Act, 2017. Secondly, if it qualifies as a supply, whether the association can claim the exemption under Entry No. 77 of Notification No. 12/2017–Central Tax (Rate). Thirdly, if the exemption applies, whether it should be calculated in the month of collection or on a pro-rata basis across the year. The AAR observed that the corpus fund is collected in advance for future capital works or contingencies such as structural repairs, repainting of the building, or other major infrastructural improvements. Even though the actual expenditure occurs later, the collection is made upfront from members. According to the authority, such collections cannot be treated as mere deposits, because they are intended for specific services or benefits to be provided by the association to its members in the future. Consequently, the authority concluded that the corpus fund contributions have the character of advance consideration for future supply of services. The AAR also referred to the time of supply provisions under Section 13(2)(a) of the CGST Act, which state that the time of supply of services is the earlier of the date of invoice or the date of receipt of payment. Since the association receives the corpus fund before the actual services are provided, the receipt of payment triggers the time of supply. A key issue examined by the authority was whether corpus fund contributions could be clubbed with monthly maintenance charges for the purpose of claiming the ₹7,500 per month exemption available to RWAs under the GST notification. The AAR clarified that monthly maintenance charges and corpus fund contributions are fundamentally different in nature. Maintenance charges relate to regular and recurring services, such as cleaning of common areas, waste management, payment of staff salaries, and electricity or water consumption for shared facilities. In contrast, the corpus fund is collected occasionally or as a one-time contribution and is earmarked specifically for capital or major non-recurring expenditures, including structural repairs or replacement of capital assets. Because of this distinct purpose and nature, the authority held that corpus fund collections cannot be aggregated with monthly maintenance charges. The authority further referred to Entry No. 77 of Notification No. 12/2017–Central Tax (Rate), which grants GST exemption to RWAs when contributions from members do not exceed ₹7,500 per month per member for common services. However, the AAR concluded that this exemption applies only to monthly maintenance contributions and not to corpus funds collected for capital expenditure. As a result, the exemption cannot be claimed for such corpus fund contributions. The Authority for Advance Ruling, Karnataka issued the various determinations: Collection of corpus fund from members for future capital expenditure constitutes a “supply” under Section 7 of the CGST Act. GST is payable at the time of collection or receipt of corpus funds, since the payment represents an advance and triggers the time of supply under Section 13. The ₹7,500 per member per month exemption available to RWAs does not apply to corpus fund contributions, as they are distinct from monthly maintenance charges. Ruling Details Applicant’s Name: M/s Apartment Owners Association of Raj Lake View Citation: JURISHOUR-396-AAR-2026(KAR) Ruling Date: 11.02.2026 Click Here To Read Ruling Read More: Minor Refurbishment of Used Cars Doesn’t Change Nature as Second-Hand Goods; GST Payable Only on Margin: AAR

Corpus Fund Collected by Apartment Owners’ Association Is ‘Supply’, GST Payable at Time of Collection; Rs. 7,500 Monthly Exemption Not Applicable: AAR

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