Resident Welfare Society Maintenance Charges & GST

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Resident Welfare Society (RWA) collect monthly maintenance charges for various services i.e. security, maintenance, electricity, water supply etc. procured for residents of residential society. In GST, exemption is available under NN-12/2017-Central Tax (R), to the services provided by RWA to its own members by way of reimbursement of charges or share of contribution up to an amount of Rs. 7,500/- per month for providing goods/services for common use of its members in a housing society.

Recently, Government has issued Circular No. 109/28/2019-GST dated 22.07.19 to clarify:

Registration

No registration till aggregate turnover in a financial year is up to Rs. 20 Lakhs.

Exemption

  • RWA registered under GST – Contribution exceeds Rs. 7,500 per month per member:- Entire amount received shall be taxable e.g. if maintenance charges received by a registered RWA are Rs.14,000 per month per member than GST @ 18% shall be payable on Rs. 14,000 instead of Rs. 6,500 (i.e. Rs. 14,000- Rs. 7,500).
  • RWA registered under GST:- Monthly Contribution does not exceeds Rs. 7,500 then it is exempt.
  • RWA unregistered under GST i.e. aggregate turnover in a financial year is up to Rs.20 Lakhs:– Contribution exceeds Rs. 7,500 per month per member, not taxable.
  • Exemption is available apartment wise and not member wise.
    e.g. Mr. Smarty owns two residential apartments in a residential complex and pays Rs. 7,500 for each apartment (in toto Rs. 15,000/- per month) as maintenance charges towards maintenance of each apartment to the RWA, the exemption from GST shall be available to each apartment and tax payable shall be Nil on his contribution in this case.