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Clarification issue on monthly subscription Fees/contribution charged by Residential welfare association. View Pdf   

Circular No: 109/28/2019- CT
F. No: 332/04/2017-TRU
Circular: FORM GST CMP-03
Date: 22-07-2019

 

 

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 28.06.2019]

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2.

 

A     RWA     has    aggregate turnover of  Rs.20  lakh or less in a financial year. It is required to take registration and pay GST on maintanance 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 liabilityon 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/-

 

2.        Difficulty, if any, in implementation of the Circular may be brought to  the notice of the Board.

 

 

 

 

                                                                                                                                                                     

 

 

 

 

Related Documents :

View Pdf  109/28/2019- CT