RWA charge monthly subscription for various services e.g. security, maintenance, electricity, water supply procured on for residents of residential society. In GST regime, exemption is available under point 11 of NN-12/2017-CT (R), to the services provided by unincorporated body or NPO (RWA) to its own members by way of reimbursement of charges or share of contribution up to an amount of Rs. 5,000/- per month per member for providing goods/services for common use of its members in a housing society or residential complex. The said limit of exemption is extended to Rs. 7,500 per member per month w.e.f. 25.01.18 vide NN-12/2018-CT (R).Recently, Government has issued Circular No. 109/28/2019-GST dt. 22.07.19 to clarify issues relating to registration, availability of exemption and ITC to RWA. Major points clarified in the circular are:
No registration till aggregate turnover in a financial year is up to Rs.20 Lakhs.
- RWA registered under GST:- Contribution exceeds 7,500 per month per member = Entire amount received shall be taxable
Example: If maintenance charges received by a registered RWA are Rs.12,000 per month per member than GST @18% shall be payable on 12,000 instead of Rs.4,500 (i.e.12,000-7,500).
- RWA registered under GST:- Contribution does not exceeds 7,500 = Exempt
- RWA unregistered under GST i.e. aggregate turnover in a financial year is up to Rs.20 Lakhs:
Contribution exceeds 7,500 per month per member = Not taxable
- Exemption is available apartment wise and not member wise.
Example: Mr. X owns two residential apartments in a residential complex and pays Rs. 15000/- per month as maintenance charges towards 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 and tax payable shall be Nil on his contribution in this case.
Availability of ITC
Input tax credit is eligible on Inputs (I), capital goods (CG) and input services (IS) used by RWA in providing taxable services to its members. ITC attributable to I, IS, CG used for effecting exempt supplies is required to be reversed as per the manner and procedure given in section 17 read with rule 42 & 43 of CGST Rules.