NEW DELHI: Clarifying ambiguities over Goods and Services Tax (GST) on services provided by resident welfare associations (RWAs), the government on Monday said that an RWA would be exempt from GST if its annual turnover was up to Rs 20 lakh, even if the monthly maintenance charge exceeded Rs 7,500.
According to the notification, if members contribute less than Rs 7,500 a month, their contribution would be exempt from GST. However, if it exceeds Rs 7,500 per month, the entire amount will be taxed. This means if the maintenance charge is Rs 8,000 for an individual resident, the GST liability will be on Rs 8 000 and not on Rs 500.
Earlier, many RWAs had sought clarification as to whether a resident must pay GST on the value over and above Rs 7,500 or on the entire amount.
This means even if the monthly contribution in a high-end housing society is Rs 15,000, but it has only 10 apartments, the annual turnover of the RWA would be less than Rs 20 lakh a year, and as a result the contributions of its members will not attract GST.
“The notification also said that 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 7,500 per month shall be applied separately for each residential apartment owned by him,” the CBDT note said.
The notification also added that by coming under the ambit of GST, the RWAs could in fact lower their tax burden as they would be able to avail of the benefits of input tax credit on GST paid by them on capital goods and inputs services such as maintenance, repair and other works.
Previously, when RWAs paid central excise or value-added tax, they could not avail of input tax credit, and this added to their operating costs.