Legal Compliance Framework Cooperative Housing Society

A. Society Statutory Registers

As per the various provision of the Society Bye-laws / Maharashtra Cooperative Societies Rules, the Society needs to keep the following statutory register.

• I Register
• J Register
• Property Register
• Share Register
• Nomination Register
• Sinking Fund Register
• Associate Membership Register
• Mortgage / Loan Register
• Managing Committee Meeting Minutes Book
• General Body Meeting Minutes Book
• Tenant Register
• Vehicle register
• Inventory / Asset Register
• Investment Register

B. Maintenance of Accounts Register

In order to maintain effective and transparent account system, the society should keep the below mentioned books of accounts as per bye law.

• Bank Register
• Cash Register
• Journal Register
• Income and Expenses Report
• Receipts & Payment Report
• Balance Sheet
• Investment Register
• Fixed Asset Register

C. Audit

As per the Maharashtra Cooperative Society Act, it is mandatory that society should get its annual accounts audited from panel of approved auditors by the State Government. You may check the approved List of Panel Auditors having required qualification and experience.

The society need to follow the below deadline in order to have a compliant Housing Society.

• Finalization of Accounts: 15th May
• Accounts to be handed over for Audit: 1st June.
• Audit Completion: 31st July
• Audit Report Upload: 31st Aug
• AGM Date: 30th Sept
• Mandatory Annual Return by Society: 30th Sept
• Mandatory Return by Society about Auditor Appointment: One month from AGM or 31st Oct
• Online Audit Order Generation by Auditor: 31st Oct
• Audit Rectification Report by Society: 3 months from the date of submission of report by Auditor
• Rectification Report Upload by Auditor through Audit login: Once received from Society.
• Auditor will verify registers maintained by society hence committee members should maintain registers mentioned above.

D. Income Tax

There is a perception that housing societies are not apparently engaged in any income earning activities, there is a perception that they are not required to comply with any income tax provisions. Section 2 (31) of the Income Tax Act defines the entities that are treated as persons, for the purpose of income tax. A person is the basic entity under the income tax laws, which has to comply with various income tax provisions, including filing of return, payment of taxes, deduction of tax at source, etc. The definition includes “an association of persons(AOP) or body of individuals, whether incorporated or not”.

As per Section 139 of Income Tax Act, person whose total income exceeds the limit are required to file income tax return mandatory. In case of society, income tax slab is started from Rs.1 to 10000. In other words, if society earn Rs.1 taxable income also then it is mandatory for them to comply with income tax procedure. 30th Sept of the year following the financial year is the date, Society Managing Committee should remember as they are required to file their Income Tax Return (ITR), as the accounts of the housing society are required to be audited under the provisions of their respective cooperative society laws. If the housing society fails to file its ITR by the due date, it has to pay interest on the outstanding tax liability in case the liability is not already discharged by way of TDS or by payment of advance tax, for the period of delay, in addition to interest liability on the shortfall in payment of balance tax after adjusting TDS and advance tax.

In case the housing society fails to file its ITR by the due date, it can still file the same by March 31 of the year next to the period for which the ITR belongs. For the delay, the society has to pay a mandatory fee of Rs 5,000 if the delay is up to December, but the fee will be Rs 10,000 if the delay goes beyond December of the next year. The mandatory fee for delay in filing of the return shall be restricted to Rs 1,000 in case the taxable amount of the housing society does not exceed Rs five lakhs.

The society needs to pay advance tax in case its advance tax liability exceeds Rs 10,000 for a year in four instalments on June 15, September 15, December 15, and March 15, in the ratio of 15 per cent, 30 per cent, 30 per cent and 25 per cent of the aggregate advance tax liability.

E. TDS (Tax Deduction at Source)

The concept of TDS was introduced with an aim to collect tax from the very source of income. As per this concept, a person who is liable to make payment of specified nature to any other person shall deduct tax at source and remit the same into the account of the Central Government. The deductee from whose income tax has been deducted at source would be entitled to get credit of the amount so deducted on the basis of Form 26AS or TDS certificate issued by the deductor. Taxes shall be deducted at the rates specified in the relevant provisions of the Act or the First Schedule to the Finance Act.

The due date for Monthly payment of tax so deducted at source is 7th of next month. Interest will be levied at 1% for every month or part of a month for delay in deduction of tax and at 1.5% for every month or part of a month for delay in remittance of tax after deduction.

TDS returns are filled on quarterly basis. Due date for return filling is as under:

No.	Quarter	Month Span	Last Date of Filling
1	1st Quarter	April – June	@31st July
2	2st Quarter	July – Sept	31st Jan
3	3rd Quarter	Oct-Dec	@31st Oct
4	4th Quarter	Jan-March	31st May

Under Section 234E of Income Tax Act, you will have to pay a fine of Rs. 200 per day (two hundred) until your return is filed. You have to pay this for every day of delay until the fine amount is equal to the amount you are supposed to pay as TDS.

F. GST (Goods & Service Tax)

All housing society that exceeds 20 lakhs of revenue must obtain GST registration. However, if the monthly contribution received from its member is less than Rs. 7500, no GST is to be charged by the housing society on the monthly bill raised by the society. Further, other dues such as property tax and electricity charges, are exempt from GST and will not be included while calculating the limit of Rs. 7500.

Further, if the aggregate turnover of the society is up to only Rs. 20 lakhs in a financial year, then such supplies would be exempted from GST even if charges per member are more than Rs. 7500.

Compliance under GST :

Society whose Annual Turnover Crosses Rs 20 Lakhs need to be Registered and such GST Registered Housing Society need to:

• Issue a GST Tax Invoice to its Members.
• File 3 returns in a month.

GSTR-1 by 10th of following month for Outward Supply (Maintenance Charges).

GSTR-2 by 15th of following month for inward Supply (Expenses Side).

GSTR-3 by 20th of following month for monthly consolidated return.

GSTR–9 by 31st December of the Following Year (Annual Return).

Thus, in all 37 returns per year will have to be filled. It is mandatory to maintain proper Records of Supply & Expenses for a period of 72 months.

Conclusion: establishing a robust legal compliance framework is crucial for the effective functioning and governance of a Cooperative Housing Society (CHS) in Mumbai. By adhering to the provisions of the Maharashtra Cooperative Societies Act and other relevant laws, CHSs can ensure transparency, accountability, and smooth operations within the society. The outlined framework, including record maintenance, financial management, statutory compliance, provides a solid foundation for CHSs to operate within the boundaries of the law while safeguarding the interests of its members. It is important for CHSs to consult legal professionals and stay updated on changing regulations to ensure continued compliance and address any legal challenges that may arise. By prioritizing legal compliance, CHSs can foster a harmonious living environment and enhance the overall well-being of its residents.