The GST Standoff: Why Noida’s Apartment Owners are Defying Tax Audits

A significant legal confrontation is unfolding in Noida’s real estate sector. The Uttar Pradesh Tax Department has initiated a series of audits against at least 25 Apartment Owners’ Associations (AOAs), demanding an 18% Goods and Services Tax (GST) on maintenance and electricity collections. The move has been met with fierce resistance from the Noida Federation of Apartment Owners Associations (NOFAA), which labels the demand as an unjustified "tax on living."

The core of the dispute lies in a technicality regarding electricity billing. Most high-rise societies in Noida are permitted to charge an additional 0.5% per unit to account for "line losses"—the electricity lost during internal distribution within the complex. While this is an administrative recovery to ensure the society doesn't lose money, tax officials are interpreting this 0.5% as a "profit margin." By labeling the AOA as a "for-profit electricity supplier," the department is attempting to bring the entire electricity collection under the 18% GST net.

This is not merely a policy change for the future; it is a retrospective hunt. Notices served to societies in Sectors 45, 77, and 78 require them to produce records dating back to the 2019-20 fiscal year. For many large complexes, the accumulated tax, interest, and penalties could exceed ₹1 crore. Since AOAs are non-profit entities with no independent capital, these "dues" would ultimately have to be recovered from the pockets of current residents.

The legal defense rests on two pillars. First, the statutory exemption: GST only applies if a member pays more than ₹7,500 in monthly maintenance AND the society's total turnover exceeds ₹20 lakh. AOAs argue that many audited societies do not meet these combined criteria. Second, the "Principle of Mutuality": Since an AOA is simply a group of owners collecting money to provide services to themselves, there is no "commercial supply" between two different parties, a prerequisite for GST.

As of late December 2025, AOAs have sought the intervention of MP Dr. Mahesh Sharma and Noida MLA Pankaj Singh. They are pushing for a clarification that utility recoveries (water and power) and non-profit maintenance should remain outside the ambit of commercial taxation. The outcome of this Noida-specific battle will likely set the precedent for millions of apartment dwellers across India.

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