Mumbai Housing Society Queries: Redevelopment & GST; Do You Really Need To Pay On Extra Space? Find Out Here

Mumbai: Redevelopment of housing societies often brings with it questions about entitlement, additional space and the taxes involved. A recent query from a housing society member sheds light on a common concern faced by many residents undergoing redevelopment.

The resident, whose society is in the process of redevelopment, explained that as per the proposal and plan approved by the general body, the developer has offered an 850 sq ft flat against the member’s entitlement of 800 sq ft. However, the developer has also demanded payment for the additional 50 sq ft, including Goods and Services Tax (GST). This led to the question: why should GST be charged when it is not applicable to redeveloped properties?

Legal Expert Clarifies Issue

Legal expert Sharmila Ranade, associated with the Mumbai Grahak Panchayat, clarified the issue. She said that while GST is indeed not applicable to the entitled area received under redevelopment, it does apply to any additional space purchased from the developer. “Since you are purchasing 50 sq ft from the developer, GST will be applicable,” she explained.

Ranade stated that societies and members must ensure there is a clear agreement on the payment terms for any additional area. Often, developers enter into a separate agreement specifically for the purchase of extra space. This not only maintains transparency but also serves the purpose of GST compliance.

She further pointed out that the development plan must be approved by the society before it is filed with the authorities. Once the proposal is passed by the society’s general body, members are bound by its terms. “It is necessary that the terms relating to payment of taxes are mentioned in the proposal, development agreement, and the permanent alternate accommodation agreement to avoid any confusion at a later stage,” Ranade added.

The matter highlights how redevelopment projects, though offering upgraded homes and amenities, can also create financial and legal grey areas for residents. Clear documentation and timely communication between developers, societies, and members remain crucial in avoiding disputes.

(The questions are answered by Sharmila Ranade, a legal expert associated with Mumbai Grahak Panchayat. The questions, in brief, may be sent to fpjchs@gmail.com)