GST Clarification on RWA charges

GST Clarification on RWA charges
  • General
  • Friday 26th July 2019
  • Author: Shreya Uppal

Highlights

  • The Finance Ministry has recently clarified in a circular that exemption from GST is available only if charges do not exceed Rs.7500 per month per RWA member.

  • In case a person owns 2 or more flats in the housing society, the limit of Rs. 7500 per month per member shall be applied separately for each flat owned by that particular person.

  • RWA’s are eligible to take Input Tax Credit (ITC) of GST paid by RWA’s on the capital goods and input services.

The Finance Ministry has recently clarified in a circular that exemption from GST is available only if charges do not exceed Rs.7500 per month per RWA member. Resident Welfare Associations collect GST on fees charged from the members owning flats in their society. If the payment of monthly maintenance fees is more than Rs. 7500 per flat per month and the annual turnover of RWA exceeds the defined limit of Rs. 20 lakhs by way of supply of services and goods, GST shall be collected @ 18% on the monthly maintenance fees charged.

Case of holding 2 or more flats by a single owner
In case a person owns 2 or more flats in the housing society, the limit of Rs. 7500 per month per member shall be applied separately for each flat owned by that particular person.
For instance, a person owns two residential flats in a housing society and pays Rs. 15000 per month as maintenance charges towards the maintenance of each apartment to the RWA( (Rs.7500 per month in respect of each residential flat),
the exemption of GST shall be available flatwise.

How GST shall be calculated?
If the charges exceed Rs. 7500 per month per member, the entire amount shall become taxable. For example, if the maintenance charges are Rs. 10,000 per month per member, GST @ 18% shall be payable on the entire amount of Rs. 10,000 and not on the left out amount after exemption (10,000-7500=2500). Therefore, GST shall come out to be 10,000*18%= 1800.

Also Read: GST on under-construction flats


ITC Clarification
The Circular further clarified that the RWA’s are eligible to take Input Tax Credit (ITC) of GST paid by RWA’s on the capital goods (generators, water pumps, lawn, furniture, etc., goods (taps, pipes, other sanitary fillings) and input services such as repair and maintenance services. 

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Tags: GST on under-construction flats

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