Monthly subscription charged up to Rs. 7500/- P.M by RWA from its Members are Exempt from GST

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CBIC vide Circular No.109/28/2019- GST dated July 22, 2019 has clarified various issues related to GST payable on the amount charged by a Residential Welfare Association (“RWA”) for providing services and goods for the common use of its members in a housing society or a residential complex.

 The following are the gist of the clarifications issued as hereunder:

S.No. Issues Clarifications
1.

Are the maintenance charges paid by residents to the 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:

  1. Up to an amount of Rs. 7500 per month per member are exempt from GST.
  2. Prior to January 25 2018, up to an amount of Rs. 5000 per month per member are exempt from GST.

The said limit was increased w.e.f January 25, 2018. [Refer clause (c) of Sl. No. 77 to the notification No. 12/2018- Central Tax (Rate) dated June 28, 2019]

2.

If aggregate turnover of RWA is Rs. 20 lakh or less in a financial year. Is it required to take registration and pay GST on maintenance charges of more than Rs. 7500/- per month per member?

Annual Turnover of RWA

Monthly Maintenance Charge

Whether exempt from GST?

Required to take Registration

 

 

 

More than Rs. 20 lakhs

More than Rs. 7500/-

No Yes

Rs. 7500/- or less

Yes Yes
 

Rs. 20 lakhs or less

More than Rs. 7500/-

Yes No

Rs. 7500/- or less

Yes No
3.

Is the RWA entitled to take input tax credit (“ITC”) 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?

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.

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/-

Complete Circular can be accessed at: http://www.a2ztaxcorp.com/wp-content/uploads/2019/07/circular-cgst-109-1.pdf