Sinking funds not refundable, GST applies on collection: AAR

Major Repairs Capitalised As Assets: Bench

- Lubna Kably

In a comprehensive ruling,the Maharashtra bench of the GST Authority for Advance Ruling (GST-AAR) has addressed a host of issues typically faced by co-operative housing societies.

Rulings given by the AAR have a persuasive value and are taken into cognisance by authorities during assessments.

Mahindra Splendour CHS submitted to the AAR bench that the basic objective of collecting amounts towards sinking fund, building repair fund, education and election fund was to meet future or unplanned major expenditure. Such contributions are in the nature of a ‘deposit’ and are used for the specific purpose as prescribed in by-laws. Thus, GST should not apply at the time of collection.