GST on monthly subscription/contribution charged by a Residential Welfare Association from its members
A number of issues have been raised regarding the GST payable on the amount charged by a Residential Welfare Association for providing services and goods for the common use of its members in a housing society or a residential complex. The same have been examined and are being clarified below.
Supply of service by RWA (unincorporated body or a nonprofit entity registered under any law) to its own members by way of reimbursement of charges or share of contribution up to an amount of Rs. 7500 per month per member for providing services and goods for the common use of its members in a housing society or a residential complex are exempt from GST
If aggregate turnover of an RWA does not exceed Rs.20 Lakh in a financial year, it shall not be required to take registration and pay GST even if the amount of maintenance charges exceeds Rs. 7500/- per month per member.
RWA shall be required to pay GST on monthly subscription/ contribution charged from its members, only if such subscription is more than Rs. 7500/- per month per member and the annual aggregate turnover of RWA by way of supplying of services and goods is also Rs. 20 lakhs or more.
RWAs are entitled to take ITC of GST paid by them on capital goods (generators, water pumps, lawn furniture etc.), goods (taps, pipes, other sanitary/hardware fillings etc.) and input services such as repair and maintenance services.
A person owns two or more flats in the housing society or residential complex: As per general business sense, a person who owns two or more residential apartments in a housing society or a residential complex shall normally be a member of the RWA for each residential apartment owned by him separately. The ceiling of Rs. 7500/- per month per member shall be applied separately for each residential apartment owned by him.
The exemption from GST on maintenance charges charged by a RWA from residents is available only if such charges do not exceed Rs. 7500/- per month per member. In case the charges exceed Rs. 7500/- per month per member, the entire amount is taxable.
For example, if the maintenance charges are Rs. 9000/- per month per member, GST @18% shall be payable on the entire amount of Rs. 9000/- and not on [Rs. 9000 – Rs. 7500] = Rs. 1500/-
Circular No. 109/28/2019-GST
F. No. 332/04/2017-TRU
Government of India
Ministry of Finance
Department of Revenue
(Tax Research Unit)
*****
New Delhi, the 22nd July, 2019
To,
The Principal Chief Commissioner/ Chief Commissioners/ Principal Commissioner/ Commissioner of Central Tax (All)/ The Principal Director Generals/ Director Generals (All)
Madam/ Sir,
Subject: Issues related to GST on monthly subscription/contribution charged by a Residential Welfare Association from its members- reg.
A number of issues have been raised regarding the GST payable on the amount charged by a Residential Welfare Association for providing services and goods for the common use of its members in a housing society or a residential complex. The same have been examined and are being clarified below.
| Sl. No. | Issue | Clarification | ||
| 1. | Are the maintenance charges paid by residents to the Resident Welfare Association (RWA) in a housing society exempt from GST and if yes, is there an upper limit on the amount of such charges for the exemption to be available? |
Supply of service by RWA (unincorporated body or a non- profit entity registered under any law) to its own members by way of reimbursement of charges or share of contribution up to an amount of Rs. 7500 per month per member for providing services and goods for the common use of its members in a housing society or a residential complex are exempt from GST.
Prior to 25th January 2018, the exemption was available if the charges or share of contribution did not exceed Rs 5000/- per month per member. The limit was increased to Rs. 7500/- per month per member with effect from 25th January 2018. [Refer clause (c) of Sl. No. 77 to the notification No. 12/2018- Central Tax (Rate) dated 28.06.2018] |
||
| A RWA has aggregate turnover of Rs.20 lakh or less in a financial year. Is it required to take registration and pay GST on maintenance charges if the amount of such charges is more than Rs. 7500/- per month per member? |
No. If aggregate turnover of an RWA does not exceed Rs.20 Lakh in a financial year, it shall not be required to take registration and pay GST even if the amount of maintenance charges exceeds Rs. 7500/- per month per member.
RWA shall be required to pay GST on monthly subscription/ contribution charged from its members, only if such subscription is more than Rs. 7500/- per month per member and the annual aggregate turnover of RWA by way of supplying of services and goods is also Rs. 20 lakhs or more. |
|||
| Annual turnover of RWA |
Monthly maintenance charge | Whether exempt? | ||
| More than
Rs. 20 lakhs |
More than Rs. 7500/- | No | ||
| Rs. 7500/- or less | Yes | |||
| Rs. 20 lakhs or less | More than Rs. 7500/- | Yes | ||
| Rs. 7500/- or less | Yes | |||
| 3. | Is the RWA entitled to take input tax credit of GST paid on input and services used by it for making supplies to its members and use such ITC for discharge of GST liability on such supplies where the amount charged for such supplies is more than Rs. 7,500/- per month per member? | RWAs are entitled to take ITC of GST paid by them on capital goods (generators, water pumps, lawn furniture etc.), goods (taps, pipes, other sanitary/hardware fillings etc.) and input services such as repair and maintenance services. | ||
| 4. | Where a person owns two or more flats in the housing society or residential complex, whether the ceiling of Rs. 7500/- per month per member on the maintenance for the exemption to be available shall be applied per residential apartment or per person? | Rs. 15000/- per month as maintenance charges towards maintenance of each apartment to the RWA (Rs. 7500/- per month in respect of each residential apartment), the exemption from GST shall be available to each apartment. | ||
| 5. | How should the RWA calculate GST payable where the maintenance charges exceed Rs. 7500/- per month per member? Is the GST payable only on the amount exceeding Rs. 7500/- or on the entire amount of maintenance charges? | The exemption from GST on maintenance charges charged by a RWA from residents is available only if such charges do not exceed Rs. 7500/- per month per member. In case the charges exceed Rs. 7500/- per month per member, the entire amount is taxable. For example, if the maintenance charges are Rs. 9000/- per month per member, GST @18% shall be payable on the entire amount of Rs. 9000/- and not on [Rs. 9000 – Rs. 7500] = Rs. 1500/- . | ||
2. Difficulty, if any, in implementation of the Circular may be brought to the notice of the Board.
22-07-2019
Susanta Kumar Mishra
Technical Officer (TRU-II)
Contact No: 011-23095558
e-mail: susanta.mishra87@gov.in
sir, we collect 30lak from 600 Residents/ month. including 4 lak from 50 members who are payiing above 7500 Rs. Thier contribution is 19.6 % of the total.
our out go is ~40 lac GST every year. can we take any credit from this , if so how much in a year.
IMPROMPTU (To share own thoughts / personal viewpoints)
“Issues related to GST on monthly subscription/contribution CHARGED BY A RESIDENTIAL WELFARE ASSOCIATION FROM ITS MEMBERS – reg.”
Points to be noted:
I. The highlighted portion specially MARKED as above, –
A) Specifically refers to ‘RWAs’; not to ‘OWNERS’ ASSOCIATION’ as formed by purchasers of UNITS in accordance with the governing law in respective states (e.g. in Maharashtra -MAOA (rtw MOFA) and in Karnataka KAOA (rtw KOFA) or any such ASSOCIATION formed in accordance with the RERA Act (rtw the Rules framed by the state governments); and
B) Has grossly over sighted the superseding ‘MUTUALITY PRINCIPLE’.
According to the said doctrine (principle) of ‘common law’ (as opposed to legislative enactment), a levy of GST suffers from / is in violation of, hence has to be urged to be ultra vies the CONSTITUTION. For an in-depth study of the stated proposition, refer the two Articles published on this website and supporting Case Law cited therein.
2. The so called clarifications, earlier or now issued, by the TRU, cannot rightly be regarded to have the force of ‘law’; unless and until formally ‘NOTIFIED’ ; and, given a statutory effect through legislative process.
II. Two limits said to have been prescribed / to apply are, –
Rs 7,500 per Unit / per month
Rs. 20,00,000 per annum (overall ceiling)
Prima facie, the two limits suffer from the malady of arbitrariness; in that, do not seem to have been based on field reality after a due appraisal and proper application of mind..
The overall ceiling seems to have been arbitrarily / imaginatively fixed, without having any regard to the actual size of the housing complex in a given case. For, if reckoned on the basis of Rs. 7,500, GST could straightaway be levied on any housing complex comprising UNITS more than 20 (i.e. 20, 00,000 / 7500 x 12).
Now, OVER to GST Experts in field practice to spare and share own independent but well founded viewpoints on the foregoing and other related aspects.
courtesy