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|
|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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