GST on RWA Maintenance Above ₹7,500 Taxable in Full at 18%: Telangana AAR

In re Sattva Magnus Apartment Owners Mutually Aided Cooperative Maintenance Society Limited (GST AAR Telangana)

Summary: The Telangana Authority for Advance Ruling, in TS AAR Order No. 13/2026 dated 30 October 2026, examined GST on maintenance, common-area electricity and water charges collected by Sattva Magnus Apartment Owners Mutually Aided Cooperative Maintenance Society Limited. The applicant was a non-profit society formed to maintain a residential project in Hyderabad and registered under the Telangana Mutually Aided Cooperative Societies Act, 1995. Its common-area maintenance services included cleaning, upkeep of roads, uninterrupted power supply, water supply and other basic amenities. It collected monthly maintenance charges on a no-profit-no-loss basis and stated that electricity and water were separately billed at cost. Its questions covered maintenance charges not exceeding ₹7,500 per member, utility charges apportioned by carpet area which could take collections above that limit, and accounting and disclosure of exempt supplies in GST returns.

Referring to Entry 77 of Notification No. 12/2017-Central Tax (Rate), as amended by Notification No. 02/2018 dated 25 January 2018, the Authority stated that qualifying services by an unincorporated body or non-profit entity to its members were exempt up to ₹7,500 per member. It held that where an RWA’s annual aggregate turnover exceeded ₹20 lakh and maintenance collections exceeded ₹7,500 per member per month, the entire maintenance amount attracted GST at 18%, rather than only the excess. Its illustration treated a ₹9,000 monthly charge as taxable in full. It also stated that maintenance collections below ₹7,500 per person remained exempt even where annual turnover exceeded ₹20 lakh.

For utilities, the Authority referred to Entries 104 and 99 of Notification No. 02/2017 dated 28 June 2017, concerning electrical energy under heading 2716 00 00 and water under HSN 2201. It read those provisions with Rule 33 of the CGST Rules, 2017, which excludes qualifying pure-agent expenditure from the value of supply. The reproduced conditions require authorisation to pay third parties, separate indication of the payment in the invoice, procurement additional to the supplier’s own services, a contractual pure-agent arrangement, no title or own-interest use, and recovery only of actual expenditure.

The Authority concluded that common-area electricity charges qualified for relief only where the society acted in accordance with the pure-agent provisions, recovered actual costs, separately indicated the charges in its invoices and made no surplus or deficit on those recoveries. Its operative table gave a combined answer to the maintenance and electricity-related questions and applied the same analogy to water covered by Entry 99. On the accounting and return-disclosure question, the ruling directed issuance of a separate bill of supply for exempt supplies; it did not prescribe a detailed GST-return reporting procedure.

FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, TELANGANA

[ORDER UNDER SECTION 98(4) OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 AND UNDER SECTION 98(4) OF THE TELANGANA GOODS AND SERVICES TAX ACT, 2017.]
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1. M/s Sattva Magnus Apartment Owners Mutually Aided Cooperative Maintenance Society Limited, Hyderabad – 500008, Telangana (GSTIN: 36ACBAS0564P1Z0) has filed an application in FORM GST ARA-01 under Section 97(1) of TGST Act, 2017 read with Rule 104 of CGST/TGST Rules.

2. At the outset, it is made clear that the provisions of both the CGST Act and the TGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the TGST Act. Further, for the purposes of this Advance Ruling, the expression ‘GST Act’ would be a common reference to both CGST Act and TGST Act.

3. It is observed that the queries raised by the applicant fall within the ambit of Section 97 of the GST ACT. The Applicant enclosed copies of challans as proof of payment of Rs. 5,000/- under SGST and Rs.5,000/- under CGST towards the fee for Advance Ruling. The Applicant has declared that the questions raised in the application have neither been decided nor are pending before any authority under any provisions of the CGST/TGST Act’2017. The application is, therefore, admitted after examining it and the records called for and after hearing the applicant as per section 98(2) of TGST Act’2017.

4. BRIEF FACTS OF THE CASE:

4.1 M/s Sattva Magnus Apartment Owners Mutually Aided Cooperative Maintenance Society Limited, Hyderabad having GSTIN: 36ACBAS0564P1Z0, H.No. 8-1-328/1/2, Sy.No. 72, Old T.S.No.30, Block-A Ward No.13, Sattva Magnus Apartments, Tolichowki, Shaikpet, Hyderabad – 500 008.

4.2 M/s Sattva Magnus Apartment Owners Mutually Aided Cooperative Maintenance Society Limited, Hyderabad is a society formed to take over the maintenance of Sattva Magnus, which is a residential project of M/s. Sattva Group which is a dynamic real estate conglomerate with a presence in multiple cities and operations across 7 Indian cities and is registered under the Telangana Mutually Aided Cooperative Societies Act, 1995.

4.3 The Sattva Magnus Apartment Owners Mutually Aided Cooperative Maintenance Society Limited is a non profit organisation registered for serving the members and for maintenance of the property and flats.

4.4 The applicant provides various service among which Common area maintenance (CAM) services which includes cleaning of the site, parking area, unwanted vegetation, maintaining the roads, un-interrupted power supply, providing water supply and other basic civil amenities to the resident members which involves considerable amount of costs of society for which the applicant collects monthly maintenance charges from members on a no profit no loss basis.

5. QUESTION RAISED:

5.1 Is GST applicable on monthly maintenance charges not exceeding Rs.7500 per member of the society?

The applicant further stated that water and Electricity are supplied on a cost-recovery basis, without any intention of profit, and are billed separately from common area maintenance (CAM) services.

5.2 Does supplying electricity for common areas exempt from GST

5.3 Does supplying water attract GST.

5.4 Is GST applicable on common are electricity charges and water charges collected on actual basis from the residents of the society in addition to monthly maintenance charges divided by total carpet area on pro rata charged to respective members flat carpet area, which exceeds the exemption limit of Rs.7500 PM vide Sy.No.77 in the entry colmn No.3 in item (c) of Notification No.12/2017-Central Tax (rates), dated. 28.06.2017, as amended vide Notification No.02/2018-CGST (Rate) dated.25.01.2018, is taxable under GST law?

5.5 Procedure for accounting and disclosing the exempt goods and services such as water charges and electricity charges collected on cost to cost basis in GST returns.

6. PERSONAL HEARING:

The authorized representative Sri V.Nagendra Prasad, Advocate appeared before the AAR on 30.09.2026 and reiterated their averments in the application submitted.

7. DISCUSSION & FINDINGS:

7.1 The Serial No. 77 of Notification No. 12/2017 as amended vide Notification No. 02/2018, dt: 25.01.2018 states that service by an unincorporated body or a non-profit entity to its own members is exempt upto an amount of Rs. 7500 per member for sourcing goods or services from a 3^rd person for the common use of its members in a housing society or a residential complex. Therefore where the aggregate turnover of a Residents Welfare Association (RWA) exceeds Rs.20 lakhs in a financial year and the amount collected for maintenance per member exceeds Rs. 7500/- then the entire amount is chargeable to GST at the rate of 18%. For example: if the maintenance charges are Rs.9000 per month per member, GST @18% shall be payable on the entire amount and not on the amount in excess of Rs.7,500/-.

Further even if the annual turnover of the RWA is greater than Rs.20 lakhs but the monthly maintenance charged per person is less than Rs. 7500/-, then such RWA need not pay tax on the amounts so collected.

7.2 Notification No.02/2017 dated:28.06.2017 provides for exemption from tax under CGST Act, 2017 on Electrical energy at Serial No. 104 with chapter heading ‘2716 00 00’. As seen from the notification there are no conditions specified for this exemption. Similarly water is exempt as per notification No. 2/2017, dated. 28.06.20217 at Sl.No. 99 vide HSN code 2201 .

7.3 Rule 33, of CGST Rules 2017, Reads as under:

Value of supply of services in case of pure agent

Notwithstanding anything contained in the provisions of this Chapter, the expenditure or costs incurred by a supplier as a pure agent of the recipient of supply shall be excluded from the value of supply, if all the following conditions are satisfied, namely;

i. The supplier acts as a pure agent of the recipient of the supply, when he makes the payment to the third party on authorization by such recipient;

ii. The payment made by the pure agent on behalf of the recipient of supply has been separately indicated in the Invoice issued by the pure agent to the recipient of service and

iii. The supplies procured by the pure agent from the third party as a pure agent of the recipient of supply are in addition to the services he supplies on his own account.

Explanation:- For the purposes of this rule, the expression “pure agent” means a person who-

a. Enters into a contractual agreement with the recipient of supply to act as his pure agent to incur expenditure or costs in the course of supply of goods or services or both;

b. Neither intends to hold nor holds any title to the goods or service or both so procured or supplied as pure agent of the recipient of supply;

c. Does not use for his own interest such goods or services so procured and

d. Receives only the actual amount incurred to procure such goods or services in addition to the amount received for supply he provides on his own account.

The rule 33 of the CGST Rules excludes the expenditure or costs incurred by a supplier as a pure agent of the recipient of the supply subject to the conditions prescribed in the rule. The rule also has an illustration for describing a pure agent:

“Illustration to rule 33 of the CGST rules: Corporate services firm A is engaged to handle the legal was pertaining to the incorporation of Company B. Other than its service fees, A recovers from B, registration fee and approval fee for the name of the company paid to the Registrar of Companies. The fees charged by the Registrar Companies for the registration and approval of the name are compulsorily level on B. A is merely acting as a pure agent in the payment of those fees. Therefore A’s recovery of such expenses is a disbursement and not part of the value supply made by A to B”.

A combined reading of the above notification and the Rule reveals that the cost of electrical energy supplied by the applicant to its members as a pure agent is not taxable at the hands of the applicant, if and only if the common area electricity charges are collected from the Members on actual basis. In order to qualify as pure agent, the association has to indicate the common area electricity charges separately in the invoice and charge to the Members only on actual basis without making any surplus or deficit to the association.

8. In view of the foregoing, we rule as follows:

In view of the above discussion, the questions raised by the applicant is clarified as below: