GST on Registration Fees & Audit Fees of Co-operative Societies: A Complete 2025 Guide

Co-operative societies have always been an integral part of India’s social and economic ecosystem. From small credit societies in villages to large housing societies in metros—co-operatives hold millions of members, handle huge funds, and form the backbone of local administration. But with the arrival of the Goods and Services Tax (GST) regime, a new question has surfaced: Are registration fees and audit fees charged by or paid by co-operative societies taxable under GST?

This question may sound technical at first, but its impact is HUGE.

Think about it:

• Societies add hundreds of new members yearly.
• Audit charges are incurred annually without fail.
• Even a minor misclassification can bring penalties, interest, compliance notices, and financial burden on members.

And most societies assume:

“These are just routine administrative fees… why would GST apply?”

But tax authorities today think differently.

This article walks you through a clear, practical, and expert-level explanation—yet in a human, non-technical tone. Whether you’re a society treasurer, an auditor, or simply a member trying to understand why your society is asking for GST on your admission fees—this guide will help you finally make sense of it all.

 

Table of Contents

1. Introduction
2. Understanding Co-operative Societies Under GST
3. What Exactly Are Registration & Audit Fees?
4. Why These Fees Are Suddenly Under Scrutiny
5. Detailed Legal Interpretation
6. Practical Scenarios (Explained With Real Examples)
7. GST Registration Threshold & Turnover Rules
8. Reverse Charge Mechanism (RCM) on Audit Fees
9. Impact on Societies, Members & Auditors
10. Common Misunderstandings Explained
11. Expert Insights
12. Step-by-Step Action Plan for Societies
13. FAQs
14. References
15. Author Bio

 

  Introduction

Across India, co-operative societies are waking up to fresh questions, circulars, and even notices from tax authorities regarding a topic most believed was “settled”—GST implications on registration fees and audit fees.

In WhatsApp groups of accountants, in CA forums, in GST communities, one question keeps popping up repeatedly:

“Does GST apply on registration fees and audit fees paid by co-operative societies?”

If you're managing a society—housing, credit, consumer, agro, or employee co-operative—you might have the same confusion.

This article aims to:

• remove the confusion,
• present a balanced view based on law, case studies, and professional experience,
• and guide co-operatives towards compliance without fear.

 

  Co-operative Societies Under GST: A Quick Background

To understand the taxability, we need to revisit the basics.

2.1 Definition of “Person”

Under Section 2(84) of CGST, a “person” includes:

• co-operative societies registered under any law.

So a society is NOT exempt simply because it is non-profit or member-based.

2.2 Definition of “Business”

Section 2(17)(e) states that “business” includes:

activities by a club, association, or society for a subscription or consideration from its members.

This line alone brings societies under GST radar.

So even if a co-operative society works for members’ welfare, the law still classifies its fee collection as business activity.

2.3 GST Registration Condition

For most service-based entities:

• GST applies only if turnover exceeds ₹20 lakh in a financial year.

Many societies comfortably exceed this through:

• maintenance charges
• admission fees
• documentation fees
• interest income (sometimes included in turnover)
• service fees
• audit cost reimbursements

Thus, even if a society thinks it is “small”, its turnover might still cross the threshold!

 

  Understanding Registration Fees & Audit Fees

These two charges seem administrative, but for GST they may become taxable supplies depending on circumstances.

3.1 Registration Fees

Registration fees include:

• admission fees for new members
• share transfer charges
• application processing fees
• membership registration charges
• fees for change of nominee name
• society formation/registration fees collected from members

Societies often treat them as “one-time charges”—but under GST, supply doesn’t have to be recurring.

3.2 Audit Fees

Audit fees include:

• statutory audit fee
• internal audit fee
• compliance audit fee
• fees collected by state co-operative auditors
• reimbursements made to CA firms

Some states’ co-operative departments recover audit fees without issuing tax invoices.
But does that mean no GST?
Not always.

 

  Why These Fees Are Suddenly Under the GST Lens

Until recently, GST discussions related mostly to:

• maintenance charges in housing societies
• service fees in credit societies
• common area usage charges

But now:

• GST departments are conducting more audits,
• societies are filing more online compliance,
• and turnover reporting is more transparent.

So authorities have begun checking:

“If maintenance fees are taxable, why not admission fees? Why not audit fees?”

The sudden rise in notices, especially from states like Kerala and Maharashtra, has triggered nationwide curiosity (and panic).

 

  Legal Interpretation: The Core of the Issue

Let's analyze the law step by step.

5.1 Is Registration Fee a Supply?

A supply under GST requires:

• service
• consideration
• done by a taxable person
• in course of business

When a society takes fees from a member:

• It provides membership benefits (service)
• Member pays money (consideration)
• Society is a taxable person
• Membership falls under business definition

Conclusion:
YES, registration/admission fee is very likely a taxable supply.

5.2 Is Audit Fee a Supply?

Audit is a professional service.

If:

• the auditor is a CA → they issue invoice + GST
• the auditor is a state department officer → complexities arise
• the auditor is unregistered → RCM may apply

Hence:
Audit fee → taxable, except in rare cases.

5.3 Reverse Charge Mechanism (RCM)

Many societies do not know:

• If a CA provides audit → GST is charged normally.
• If an unregistered CA provides service → society must pay GST under RCM.
• If co-operative department auditors recover “audit fees” → debated, but many CAs argue it is still service.

 

  Practical Scenarios Explained With Real Examples

Let's make this easier.

Scenario 1: Housing Society charging ₹1,000 admission fee

Turnover: ₹28 lakh
→ Above threshold
→ GST applicable on admission fee.

Scenario 2: Credit society paying ₹50,000 audit fee to a CA

CA issues invoice → GST charged.
Society may claim ITC if eligible.

Scenario 3: State co-operative department auditor collects ₹10,000 as “audit recovery”

If they do not issue invoice:

• Is it supply? Possibly yes.
• Is it exempt? No specific exemption.
• Should society pay RCM? Many CAs say yes (until clarified).

 

  Understanding Turnover Limits and Exemptions

Society must compute aggregate turnover including:

• maintenance charges
• admission fees
• audit fee recoveries
• penalties (sometimes included)
• rent income
• contributions
• documentation fees

If turnover exceeds ₹20 lakh, GST registration is mandatory.

❗ Important: Housing Society Exemption

• ₹7,500 per member per month rule applies ONLY to maintenance.
• NOT applicable to registration fees.
• NOT applicable to audit fees.

Many societies misunderstand this.

 

  Audit Fees & Reverse Charge Mechanism (RCM)

This is the hottest topic right now.

8.1 When is RCM applicable?

RCM applies when:

• service provider is unregistered
• service category falls under notified RCM list

Audit is taxable professional service.
If CA is unregistered → society pays GST under RCM.

8.2 State co-operative department auditors

This is tricky.

• They do not issue tax invoices
• They collect audit fees
• They are not “professionals” under CA Act
• But they are rendering a service

In absence of clarity:

• Conservative approach → treat as RCM
• Practical approach → wait for notification
• Many CAs suggest → apply RCM if turnover > ₹20 lakh

 

  Impact Analysis

Let’s consider how all this impacts real-life stakeholders.

For Co-operative Societies

• Higher compliance burden
• Need for registration
• Issuing invoices
• Keeping books clean
• Filing GSTR-1, GSTR-3B

For Members

• Increased admission fees
• GST component added
• More transparency in charges

For Auditors

• More advisory work
• Determining RCM applicability
• Ensuring society's compliance

Who Benefits?

• Small societies below ₹20 lakh turnover

Who Loses?

• Large housing societies
• Credit societies
• Employee welfare societies

 

  Common Misunderstandings Clarified

❌ Misunderstanding 1

“Registration fees are exempt.”
→ No, they are NOT exempt.

❌ Misunderstanding 2

“If turnover < ₹20 lakh, no GST ever applies.”
→ Not always true.

❌ Misunderstanding 3

“Audit fee is statutory, so GST doesn’t apply.”
→ False. Statutory nature doesn’t make it exempt.

❌ Misunderstanding 4

“Society is non-profit, so GST doesn’t apply.”
→ Zero relevance. GST applies to “business activity,” not profit motive.

 

  Expert Commentary (Humanized Opinion)

Having worked over 11 years across accounting, taxation, and audit compliance, I’ve seen a major shift in how authorities interpret society transactions.

Earlier, tax officers hardly cared about:

• admission fees
• membership fees
• audit recoveries

But the GST system changed everything. The government wants:

• transparency,
• traceability,
• and revenue from all types of supplies.

Co-operative societies today cannot simply say:

“We are not doing business.”

GST law specifically includes societies under business definition.
And as digital scrutiny increases—especially through:

• AIS
• MIS
• financial data matching
  —societies must become more compliant.

My suggestion?
Take a proactive approach instead of a reactive one.

If you treat these fees properly today:

• you avoid penalties,
• stay compliant,
• and maintain member trust.

 

  Actionable Steps for Co-operative Societies (Do This Now)

Here is a simple, practical checklist.

✅ Step 1: Map ALL revenue sources

Include:

• Registration fee
• Admission fee
• Transfer fee
• Documentation charges
• Audit fee reimbursements

✅ Step 2: Check if turnover exceeds ₹20 lakh

If yes → GST registration mandatory.

✅ Step 3: Categorize each fee

Is it supply?

• Yes → charge GST
• No → document reasons

✅ Step 4: Check RCM applicability for audit

• CA unregistered → RCM
• Department auditor → conservative RCM approach

✅ Step 5: Maintain proper invoices & records

Even for one-time fees.

✅ Step 6: Claim ITC wherever possible

Societies often miss this.

✅ Step 7: Inform members

Transparency avoids complaints.

 

  FAQs

Q1. Must every co-operative society register under GST?

No. Only when aggregate turnover exceeds ₹20 lakh.

Q2. Is registration fee automatically taxable?

If turnover > threshold → yes.
If not → evaluate nature of supply.

Q3. Are audit fees always under RCM?

Not always. It depends on who provides the service.

Q4. Can society claim ITC on audit fees?

Yes, if registered and fulfilling ITC conditions.

Q5. Does ₹7,500 exemption apply to admission fees?

No. It applies only to housing maintenance charges.

 

  References

• GST Law (India)
• TaxGuru Articles
• ICMAI Papers
• GST Housing Society Clarifications
• Kerala CGST Officer Commentary

 

  Author Bio

Written by: Manika TaxWise – Accounting, GST & Compliance Experts
With 11+ years of hands-on experience in accounting, finance, GST, and business compliance, we simplify complex legal concepts into easy, practical guides. Through our educational platform “Learn with Manika”, we help students, professionals, and business owners stay updated and confident in financial laws.