NEW DELHI: In a significant development for residents and Resident Welfare Associations (RWAs) across the country, the GST Council in its 54th meeting on September 9, is expected to deliberate on increasing the threshold limit for the Goods and Services Tax (GST) applicable on maintenance charges.
According to sources, the threshold limit may be increased to R9,000-R10,000 per month. Currently, maintenance charges paid by residents to RWAs are exempt from GST up to R7,500 per month per member. However, should the monthly charge exceed this limit, GST is levied on the entire amount, provided the aggregate turnover of the RWA reaches R20 lakh or more.
Also, the GST applicability on the transfer of development rights within the joint development agreements (JDAs) in the real estate will likely be discussed. A JDA is a legal contract that facilitates collaboration between landowners and developers to undertake construction projects on the landowner’s property.
In India, JDAs have become a prevalent method for real estate development across various sectors. In addition, the Council may deliberate on under-construction properties as well. The panel on real estate is reportedly in favour of reducing GST rates on under-construction properties to enhance housing affordability.
In related news, there remains ongoing ambiguity regarding the imposition of GST on commercial transactions processed through PoS machines,QR Codes and net banking for amounts below R2,000.
Sources indicate that while the GST authorities have raised tax demands on certain transactions in this category, clarity on the GST applicability is still pending. In the upcoming meeting, imposition of an 18% GST rate on such transactions may be discussed. Earlier, this newspaper had reported that the council meeting will focus on proposals aimed at rationalizing the current GST structure, which imposes an 18% tax on mediclaim premiums.
According to sources, among the proposals under consideration are options to allow mediclaim firms to charge a reduced GST rate of 5% without the benefit of input tax credit (ITC) or to implement a uniform 5% GST rate specifically for B2C supplies.
Another important item on the agenda will be the clarification regarding the valuation of payments for services received from related parties, particularly in light of recent cases involving Infosys. This clarification is expected to provide much-needed guidance to businesses that engage in inter-company transactions under the GST framework.