Noida Housing Societies Struggle With Crores in GST Electricity Notices

The shimmering skyline of Noida is suddenly in the middle of an unexpected GST battle. In the past couple of months, people living in several high-rise societies in Noida and other parts of NCR have found themselves saying, “Who is going to shell out crores of GST dues in property bills?”

Tax Notices Trigger Widespread Concern

This arises out of notices issued by the Uttar Pradesh tax department to over two dozen apartment owners’ associations (AOAs) in Noida. These notifications ask for information about maintenance as well as electricity dues collected from flat buyers with the implication that the 18 percent GST could be charged on the amounts. In many cases, the liability may exceed ₹1 crore after the addition of interest charges.

Until recently, all AOAs thought that their charging of maintenance costs and electricity recovery was on totally sound tax grounds. Under the previous VAT regime, and again under the new GST regime introduced in 2017, such costs were deemed exempt or non-taxable, as long as they were charged on a no-profit basis. This situation has changed this current year, though, as tax authorities have started dropping by the offices of each society to demand the accounts of services offered to the public.

The Core Dispute: Electricity as a “Composite Supply”

The root of the problem begins with the interpretation of the department that the power tariffs delivered through the centralized supply cannot be termed as simple pass-through and are being regarded as ‘composite supplies’ consisting of maintenance services that incur 18% GST. The interpretation has come as a shock to the RWAs, as many of them had never accounted or budgeted for this expense before.

According to the resident representatives, such a measure violates an already existing directive. According to Rajiva Singh, the president of the Noida Federation of Apartment Owners Association (NOFAA), the exemption of the charge of collecting the cost of the electricity from the residents has been ongoing for many years. He argues that the applicability of the GST in the matter violates the October 2023 CBIC circular or the CGST Act. Yet, the societies are obliged to explain the amount collected a few years ago.

Anxiety Grows Inside Housing Societies

The effect is already being felt on the ground. In Sector 50's Antriksh Green, a notice seeking records for FY 2019-20 has raised the spectre of a tax demand running into seven figures. Office bearers scramble through old files, invoices, and ledgers in a desperate attempt to reconstruct years of financial data, with residents worried about what the final outcome could mean for their household budgets.

This margin of five percent over and above the electricity bills charged by AOAs is a bone of contention. According to the state tariff schedule, the margin covers administrative costs such as billing, audits, distribution, and maintenance of electrical infrastructure. The societies insist that this is cost recovery, not commercial mark-up. But the tax department has questioned if AOAs can claim themselves as "pure agents" when the exact amount billed was not passed on without additions.

A City-Wide Issue Taking Shape

Such notices have also been received by some large societies, including Lotus Boulevard, situated at Sector 100, and Prateek Stylome at Sector 45. The RWAs in such societies are consulting chartered accountants and lawyers while coordinating with NOFAA. Initially, the notices were received by individual societies. However, now the issue has become a city-wide problem, with various societies coming together to meet the challenge.

The residents are caught in the crossfire. AOAs, according to many residents, are non-profit-making organizations that function with the aid of unpaid workers. The amount that would have been charged by the government as a result of the GST assessment will have to be paid by the flat owners, many of whom have never been warned of the existence of such a liability. Families from the middle class may be crushed by such a burden, running into tens of thousands of rupees.

This tension was further fueled when tax officials allegedly started issuing summon notices to the office-bearers of AOA themselves. NOFAA called a halt to these summon notices while talks were under way.

Why Are Noida Housing Societies Facing GST Notices?

In the case of a number of high-rise communities in the Noida area, there has been a notice from the Uttar Pradesh tax department for non-payment of 18% GST on maintenance and electricity charges. The Uttar Pradesh tax department’s understanding of the matter states that the supply of electricity, through community connections, denotes a composite supply of services and thus comes under the purview of the Goods and Services Tax. 

This new stance has come as a shock to the resident welfare associations (RWAs), who had been maintaining that these charges fall outside the purview of taxation. The AOAs need to provide financial documents, which, in all probability, can involve backdated taxes amounting to crores of rupees.

How Could This GST Demand Impact Residents and RWAs?

The GST notices are expected to be financially stressful for both residents and the RWAs. The apartment owner's association, being a non-profit organization, could be compelled to transfer any liability for GST directly to the residents. In the case of certain apartment societies, the aggregate notice, including interest and penalties, could be in excess of ₹1 crore, causing consternation for residents. The AOAs have the CTL burden of reconciling the maintenance and electricity bills for several years.

What Lies Ahead

Going forward, AOAs are considering taking up the issue to higher levels beyond the states. Representations to the CBIC, revenue secretary, and even to the finance minister are in the offing, with the demand that there must be an official clarification that electricity and maintenance recoveries by AOAs should not attract this kind of GST.

For now, the shadow of doubt looms large over Noida's high-rise societies. Until a final verdict is issued, the apprehension is there that a literal interpretation of the GST rules would place an inordinate and unforeseen cost burden on middle-class residents-for a controversy they had never bargained for. 

Read More: Pariksha Pe Charcha 2026 Registration Opens, Key Details for Students