GST on RWA on Subscription/ Contribution Received from its Members
After long negotiations made in house, the Finance Ministry and the GST Council have come up with clarifications on several issues raised in past for levy of GST on payments received by RWA (Residential Welfare Associations) from its members.
RWA are common welfare agencies formed in residential societies responsible for keeping maintenance chores and well being of the society for which they receive some amount from their members. These payments are received by the RWAs from their associated members for the services or goods of common/special use they provide.
Clarifications with respect to the above issued in the CicularNo. 109/28/2019-GST Dt.22-7-2019 includes the following key points:
– Supply of Service by Resident Welfare Associations ( any unincorporated body or non -profit entity registered under any law) to its members associated by way of reimbursement of charged or contribution up to an amount of Rs 7500/- per month per member shall be exempted from Good and Servives Tax for providing services or goods of common use in a housing society or a residential complex. Prior to this, the exemption was only limited to an amount of Rs 5000/- per month per member.
– No obligation shall be placed on an RWA to obtain compulsory registration under Goods and Service Tax if its turnover does not exceed Rs 20 lakhs in a financial year, even if the amount on subscription or contribution exceeds Rs 7500/- per month per member. This means if the turnover of RWA exceeds the exemption limit and the amount received is below Rs 7500 then GST shall be exempted. However, if turnover is less than exemption than whether the amount received is below or above Rs 7500/- it shall be exempted from Goods and Services Tax.
– RWAs shall be permitted to avail ITC ( Input tax credit ) on the input used to produce goods for its members or discharge its services to its members. They have also been allowed to avail ITC on capital goods including generators, water pumps, furniture, etc ) and input maintenance services.
Also Read: New GST Registration after Cancellation
– The ceiling limits for charging GST being Rs 7500/- per month shall be considered for each respective flat or residential apartment owned by the member. For instance, if a member owns two or more flats in a housing society he/she is registered as a separate representative for each different flat he/she owns thus, he/she pays Rs 15,000 to RWA, then he shall be exempted for both the flats he/she owns. In short, the exemption shall be granted on apartment holding rather than on per person basis.
– For the computation of GST to be levied on the subscription/contribution amount to RWA, the whole amount above Rs 7500 shall have to be considered. For instance, if the subscription amount per member is Rs 5000, then no GST shall become payable and it will wholly be exempted. While if the subscription amount received by RWA is Rs 8000 then GST shall be charged on Rs 8000/- (at 18% i.e: Rs 1440/- ) and not on Rs 500 ( 8000-7500/- ).
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