Registration Requirement in GST for Housing Societies and Residential Welfare Association for providing services and goods for the common use of its members

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Registration Requirement in GST for Housing Societies and Residential Welfare Association for providing services and goods for the common use of its members

Tax Research Unit (Ministry of Finance) has issued a Circular No 109/28/2019- GST dated 22nd July 2019 clarifying some issued in the matter. Same has been summarized for better understanding –

A number of issues have been raised regarding the GST payable on the amount charged by a Residential Welfare Association for providing services and goods for the common use of its members in a housing society or a residential complex. The same have been examined and are being clarified below.

Scenario No 1

Aggregate Turnover of Society Less than Rs 20 Lakhs

Monthly Maintenance per member Rs 7,500 or less

Exemption from Registration – Exempt

Scenario No 2

Aggregate Turnover of Society Less than Rs 20 Lakhs

Monthly Maintenance per member Rs 7,500 or more (for some members less than Rs 7,500 PM)

Exemption from Registration – Exempt

Scenario No 3

Aggregate Turnover of Society More than Rs 20 Lakhs

Monthly Maintenance per member Rs 7,500 or less

Exemption from Registration – Exempt

Scenario No 4

Aggregate Turnover of Society More than Rs 20 Lakhs

Monthly Maintenance per member Rs 7,500 or more (for some members less than Rs 7,500 PM)

Exemption from Registration – Not Exempt

No 1 Issue

What is the exemption limit under GST on the maintenance charges paid by residents to the Resident Welfare Association (RWA) in a housing society?

Supply of service by RWA (unincorporated body or a non- profit entity registered under any law) to its own members by way of reimbursement of charges or share of contribution up to an amount of Rs. 7500 per month per member for providing services and goods for the common use of its members in a housing society or a residential complex are exempt from GST.

Till 25th January 2018, the limit was Rs 5,000 per month per member.

No 2 Issue

Can RWA Claim ITC on GST pain on Input and Services paid for making supplies to members?

RWAs are entitled to take ITC of GST paid by them on capital goods (generators, water pumps, lawn furniture, etc.), goods (taps, pipes, other sanitary/hardware fillings, etc.) and input services such as repair and maintenance services.

No 3 Issue

How should the RWA calculate GST payable where the maintenance charges exceed Rs. 7500/- per month per member? Is the GST payable only on the amount exceeding Rs. 7500/- or on the entire amount of maintenance charges?

The exemption from GST on maintenance charges charged by an RWA from residents is available only if such charges do not exceed Rs. 7500/- per month per member. In case the charges exceed Rs. 7500/- per month per member, the entire amount is taxable.

For example, if the maintenance charges are Rs. 9000/- per month per member, GST @18% shall be payable on the entire amount of Rs. 9000/- and not on [Rs. 9000 – Rs. 7500] = Rs. 1500/-

No 4 Issue

Where a person owns two or more flats in the housing society or residential complex, whether the ceiling of Rs. 7500/- per month per member on the maintenance for the exemption to be available shall be applied per residential apartment or per person?

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. 7500/- per month per member shall be applied separately for each residential apartment owned by him

For example, if a person owns two residential apartments in a residential complex 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 apartment), the exemption from GST shall be available to each apartment

Download Circular No.109/28/2019- GST

Courtesy: Expertmile