Clarification
on Issues related to GST on monthly subscription/contribution charged by a
Residential Welfare Association from its members.
Circular
No.109/28/2019- GST dated 22nd July, 2019
S.N
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Issue
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Clarification
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1
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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?
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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 28.06.2019]
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2
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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?
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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.
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Annual
turnover of RWA
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Monthly
maintenance charge
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Whether
exempt?
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More than Rs. 20 lakhs
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More
than Rs. 7500/-
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No
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Rs.
7500/- or less
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Yes
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Rs. 20 lakhs or less
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More than Rs. 7500/-
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Yes
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Rs. 7500/- or less
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Yes
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3
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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?
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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
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4
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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?
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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. 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.
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5
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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?
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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/-.
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