Clarification on GST on Maintenance Charges paid by Members to Resident Welfare Society vide Circular No 109/28/2019- GST issued by Tax Research Unit dated 22nd July 2019 

GST on monthly subscription/contribution charged by a Residential Welfare Association from its members:

Even though a clarification was earlier issued by TRU earlier, there were numerous queries on this issue 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.

Tax research Unit (Ministry of Finance) has issued a Circular No 109/28/2019- GST dated 22nd July 2019 clarifying some issued in the matter. Same has been summarized for better understanding –

Registration Requirement for Housing Societies/ RWA’s as per recent Circular – 

Scenario No Aggregate Turnover of Society Monthly Maintenance per member Exemption from Registration Remarks
1 Less than Rs 20 Lakhs Rs 7,500 or less Exempt The condition of registration only arises when the aggregate turnover exceeds Rs 20 lakhs and monthly maintenance per member exceeds Rs 7,500/-
2 Less than Rs 20 Lakhs Rs 7,500 or more (for some members less than Rs 7,500 PM) Exempt
3 More than Rs 20 Lakhs Rs 7,500 or less Exempt
4 More than Rs 20 Lakhs Rs 7,500 or more (for some members less than Rs 7,500 PM) Not Exempt

S. No Issue Clarification
1 What is the exemption Limit under GST on the  maintenance charges paid by residents to the Resident Welfare Association (RWA) in a housing society 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.

Till 25th January 2018 the limit was Rs 5,000 per month per member.

2 Can RWA Claim ITC on GST pain on Input and Services paid for making supplies to members? 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.
3 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/-

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? 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

For example, if a person owns two residential apartments in a residential complex and pays 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.

Note – This is for information only. For exact details of changes, the notification/Circular may please be referred to, as and when they are issued.

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11 Comments

  1. Amit says:

    Hi Rohit, thank you for the reply. I am still unable to resolve this impasse. I put down my case. Plz advice

    My RWA has appointed a property management service co xyz. This property management co has a turnover of above 20 lac. Now the property management xyz is raising invoice for monthly maintainence say of 4500 per month ( 4.5 per sq ft 1000 sq ft flat) and charging a gst above this. Which means 4500+gst.

    Now if we are saying gst is not applicable to me or my RWA ( RWA turnover is less than 20lacs) then who will bear this gst? No service provider or vendor will issue bill against service provided without gst. So what am I missing. ( No cash dealings allowed)

    And if you say RWA will bear and not owners then where is this corpus for gst coming from ?

    Please not the property management service co will be handling the entire maintainence of the society.

    Plz explain this case. Because the circular applicability is no understood

  2. Amit says:

    Please explain the following if my understanding is right. I have a property management service that manages my property.

    1. My RWA has turnover of less than 20 lacs. And individual flat maintainence amounts are less than 7500. There i do not pay gst to a property management service company?

    2. If I do, how do i claim ITC as RWA is not registered under GST

    3. If i cannout claim ITC. How is my liability better or worse off than an RWA that has turnover of over 20lac and maintainence per flat over 7500. As that RWA can claim ITC

    1. fcsrohit says:

      1. My RWA has turnover of less than 20 lacs. And individual flat maintainence amounts are less than 7500. There i do not pay gst to a property management service company? – GST in that case is not applicable and need not be paid for maintenance charges.

      2. If I do, how do i claim ITC as RWA is not registered under GST – ITC is not available to an unregistered entity. GST paid to suppliers shall become cost in that case.

      3. If i cannout claim ITC. How is my liability better or worse off than an RWA that has turnover of over 20lac and maintainence per flat over 7500. As that RWA can claim ITC – In case one is registered under GST and availing benefit of ITC, then the benefit should be passed on to the flat owners who are paying maintenance as reduction of maintenance charges.

  3. PB says:

    Hi ,
    I have 3 types of tower in my society and there monthly rental is as follows
    A- Rs. 7,800
    B- Rs. 6,000
    C- Rs. 9,000
    and the annual turnover exceeds Rs.20,00,000.
    The difference in the sizes is on account of difference in the area per sq feet.
    What will be the GST implications?
    To my understanding A type and C type will have to pay GST but what about B type? And legally we cannot make association seperate for each type of tower.

    1. PANKAJ KARMAKAR says:

      in our residential complex we have different types and every month we have different Maintenance charges. some months it is less than 7500.00 and some months it is more than 7500.00. so, Should I be charged for GST for those months with more than 7500.00 or thrpoughout the year.?

      1. Harish.p.devda@gmail.com says:

        The notification prescribes 7500 limit per month per member basis
        , therefore, such limit has to be seen per month wise ‘
        usually RWA collects MC quarterly basis then such limit could be 22500 per member per quarter

    2. Harish.p.devda@gmail.com says:

      Circular provides where the amount collected per month per member exceeds INR 7500 then entire amount would be taxable – this is incorrect as the notification itself tells upto an amount which means till INR 7500 amount should be exempt and anyththing above 7500 should be leviable to GST at the rate of 18%
      In ur example tax implications would be as follows:
      A 7800 – taxable only 300 and 7500 exempt
      b 6000 – entire amount exempt
      C 9000 – taxable 1500 and 7500 exempt

      1. Amit Chakraborty says:

        Hi, As per guidelines it says “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/-”

        However as per you above comments you said GST will be application on the amount above Rs 7500. Can you please clarify. Also please let me know whether the input tax credit should be pass on the apartment owner when owner paid the GST

  4. Kshetrabasi says:

    Sir
    In our society RWA is there, but not fully fuctional.
    CAM charges are collected through a third party agency.

    Still can we get the GST benefit if our CAM charges are less?

    1. Vinod Tyagi says:

      If by “GST benefit, you mean to say exemption from GST liability, the circular clarifies:
      Supply of service
      (a) by RWA (unincorporated body or a non- profit entity registered under any law)
      (2) to its own members
      (3) 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 your case, these conditions do not qualify your monthly charges to be exmpt.

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